IRC Limited — Interim / Quarterly Report 2018

Apr 19, 2018

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Lai Sun Development Company Limited (Stock Code: 488)

For the six months ended 31 January 2018

Corporate Information

PLACE OF INCORPORATION Hong Kong

BOARD OF DIRECTORS

Executive Directors

Lam Kin Ngok, Peter, GBS (Chairman) Chew Fook Aun (Deputy Chairman) Lau Shu Yan, Julius (Chief Executive Officer) Lam Hau Yin, Lester

Non-executive Directors

Lam Kin Ming U Po Chu

Independent Non-executive Directors

Ip Shu Kwan, Stephen, GBS, JP Lam Bing Kwan Leung Shu Yin, William

AUDIT COMMITTEE

Leung Shu Yin, William (Chairman) Lam Bing Kwan Lam Kin Ming

REMUNERATION COMMITTEE

Leung Shu Yin, William (Chairman) Chew Fook Aun Lam Bing Kwan

COMPANY SECRETARY

SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong

INDEPENDENT AUDITORS

Ernst & Young Certified Public Accountants

PRINCIPAL BANKERS

Bank of China (Hong Kong) Limited The Bank of East Asia, Limited China Construction Bank (Asia) Corporation Limited DBS Bank Ltd. Hang Seng Bank Limited The Hongkong and Shanghai Banking Corporation Limited Industrial and Commercial Bank of China (Asia) Limited Shanghai Pudong Development Bank Co., Ltd.,

Hong Kong Branch Standard Chartered Bank (Hong Kong) Limited United Overseas Bank Limited

SHARES INFORMATION Place of Listing

The Main Board of The Stock Exchange of Hong Kong Limited

Stock Code / Board Lot

488 / 300 Shares

Chow Kwok Wor

American Depositary Receipt

REGISTERED OFFICE / PRINCIPAL OFFICE

11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon, Hong Kong

Tel: (852) 2741 0391 Fax: (852) 2785 2775

AUTHORISED REPRESENTATIVES

Chew Fook Aun Chow Kwok Wor

CUSIP Number: 50731V102 Trading Symbol: LSNVY ADR to Ordinary Share Ratio: 1:8 Depositary Bank: The Bank of New York Mellon

WEBSITE

www.laisun.com

INVESTOR RELATIONS

Tel: (852) 2853 6116 Fax: (852) 2853 6651 E-mail: ir@laisun.com

1

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

The board of directors (the “ Board ”) of Lai Sun Development Company Limited (the “ Company ”) is pleased to present the unaudited consolidated results of the Company and its subsidiaries (the “ Group ”) for the six months ended 31 January 2018 together with the comparative figures of the last corresponding period as follows:

Condensed Consolidated Income Statement

For the six months ended 31 January 2018

			Six months ended	Six months ended	Six months ended
			31 January
			2018		2017
			(Unaudited)	(Unaudited)
		Notes	HK$’000		HK$’000
	TURNOVER	3	863,780		818,436
	Cost of sales		(366,937)		(333,965)
	Gross profit		496,843		484,471
	Other revenue		73,273		21,776
	Selling and marketing expenses		(10,901)		(20,212)
	Administrative expenses		(155,237)		(136,132)
	Other operating expenses		(148,823)		(132,907)
	Fair value gains on investment properties		575,044		502,876
	PROFIT FROM OPERATING ACTIVITIES	4	830,199		719,872
	Finance costs	5	(138,522)		(84,488)
	Share of profits and losses of associates		(11,832)		6,960
	Share of profits and losses of joint ventures		612,585		333,817
	PROFIT BEFORE TAX		1,292,430		976,161
	Tax	6	(41,176)		(43,653)
	PROFIT FOR THE PERIOD		1,251,254		932,508
	Attributable to:
	Owners of the Company		1,223,639		913,135
	Non-controlling interests		27,615		19,373
			1,251,254		932,508
	EARNINGS PER SHARE ATTRIBUTABLE TO
	OWNERS OF THE COMPANY	7		(Adjusted)
	Basic		HK$2.022		HK$1.513
	Diluted		HK$2.013		HK$1.510

2 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Condensed Consolidated Statement of Comprehensive Income For the six months ended 31 January 2018

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	PROFIT FOR THE PERIOD	1,251,254	932,508
	OTHER COMPREHENSIVE INCOME/(EXPENSE) TO BE RECLASSIFIED
	TO PROFIT OR LOSS IN SUBSEQUENT PERIODS:
	Changes in fair values of available-for-sale financial assets	167,315	52,177
	Exchange realignments	114,518	(50,324)
	Share of other comprehensive income/(expense) of associates	267,994	(135,542)
	Share of other comprehensive income of a joint venture	962	—
	Cash flow hedges:
	Effective portion of changes in fair value of hedging instruments
	arising during the period	(5,728)	—
	Reclassification adjustments for exchange loss included in the
	condensed consolidated income statement	(3,535)	—
		(9,263)	—
	OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE PERIOD	541,526	(133,689)
	TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	1,792,780	798,819
	Attributable to:
	Owners of the Company	1,765,183	779,318
	Non-controlling interests	27,597	19,501
		1,792,780	798,819

3

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

As at 31 January 2018

Condensed Consolidated Statement of Financial Position

			31 January	31 July
			2018	2017
			(Unaudited)	(Audited)
		Notes	HK$’000	HK$’000
	NON-CURRENT ASSETS
	Property, plant and equipment		4,742,709	4,034,466
	Prepaid land lease payments		19,359	19,873
	Investment properties		17,233,922	16,447,014
	Properties under development for sale		815,394	1,571,635
	Goodwill		5,161	5,161
	Interests in associates		3,807,340	3,555,876
	Interests in joint ventures		7,925,439	7,224,183
	Available-for-sale financial assets		1,785,379	1,589,670
	Pledged bank balances and time deposits		62,404	69,675
	Depositspaid and other receivables		338,128	231,868
	Total non-current assets		36,735,235	34,749,421
	CURRENT ASSETS
	Properties under development for sale		965,856	—
	Completed properties for sale		252,121	252,121
	Inventories		33,549	31,327
	Debtors, deposits paid and other receivables	8	639,319	530,416
	Pledged bank balances and time deposits		239,690	213,640
	Cash and cash equivalents		2,025,409	2,664,066
	Total current assets		4,155,944	3,691,570
	CURRENT LIABILITIES
	Creditors, deposits received and accruals	9	1,445,838	452,005
	Tax payable		99,557	119,062
	Guaranteed notes	10	—	2,731,230
	Bank borrowings		172,486	157,582
	Total current liabilities		1,717,881	3,459,879
	NET CURRENT ASSETS		2,438,063	231,691
	TOTAL ASSETS LESS CURRENT LIABILITIES		39,173,298	34,981,112
	NON-CURRENT LIABILITIES
	Bank borrowings		6,403,514	6,748,399
	Guaranteed notes	10	3,105,184	—
	Derivative financial instruments		5,728	—
	Deferred tax		146,453	141,291
	Provision for tax indemnity		93,000	93,000
	Long term deposits received and other payables		591,141	886,435
	Deferred rental		6,083	7,448
	Total non-current liabilities		10,351,103	7,876,573
			28,822,195	27,104,539
	EQUITY
	Equity attributable to owners of the Company
	Share capital		4,076,816	4,063,736
	Investment revaluation reserve		1,621,161	1,442,513
	Share option reserve		64,490	64,693
	Hedging reserve		(2,552)	1,852
	Capital reduction reserve		4,692	4,692
	General reserve		646,700	646,700
	Other reserve		202,822	215,998
	Statutory reserve		55,211	46,240
	Exchange fluctuation reserve		(15,027)	(382,327)
	Retainedprofits		21,650,060	20,495,693
			28,304,373	26,599,790
	Non-controllinginterests		517,822	504,749
			28,822,195	27,104,539

4

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Condensed Consolidated Statement of Changes in Equity For the six months ended 31 January 2018

	Attributable to owners of the Company Investment Share Capital Exchange Non- Share revaluation option Hedging reduction General Other Statutory fluctuation Retained controlling capital^ reserve reserve reserve reserve reserve reserve reserve reserve profits Sub-total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 31 July 2017 and 1 August 2017 (Audited) 4,063,736 1,442,513 64,693 1,852 4,692 646,700 215,998 46,240 (382,327) 20,495,693 26,599,790 504,749 27,104,539 Profit for the period — — — — — — — — — 1,223,639 1,223,639 27,615 1,251,254 Other comprehensive income/ (expense) for the period: Changes in fair values of available-for-sale financial assets — 167,315 — — — — — — — — 167,315 — 167,315 Exchange realignments — — — — — — — — 114,518 — 114,518 — 114,518 Share of other comprehensive income/(expense) of associates — 11,333 — 4,859 — — — — 251,820 — 268,012 (18) 267,994 Share of other comprehensive income of a joint venture — — — — — — — — 962 — 962 — 962 Net loss on cash flow hedges — — — (9,263) — — — — — — (9,263) — (9,263)
Total comprehensive income/ (expense) for the period — 178,648 — (4,404) — — — — 367,300 1,223,639 1,765,183 27,597 1,792,780 Final 2017 dividend declared — — — — — — — — — (60,509) (60,509) — (60,509) Share of reserve movements of an associate — — (88) — — — (13,176) 8,971 — (8,763) (13,056) — (13,056) Shares issued in lieu of cash dividend* 12,683 — — — — — — — — — 12,683 — 12,683 Dividend paid to a non-controlling shareholder of a subsidiary — — — — — — — — — — — (14,524) (14,524) Share options exercised# 397 — (115) — — — — — — — 282 — 282
At 31 January 2018 (Unaudited) 4,076,816 1,621,161 64,490 (2,552) 4,692 646,700 202,822 55,211 (15,027) 21,650,060 28,304,373 517,822 28,822,195

^ With effect from 15 August 2017, every fifty issued shares are consolidated into one share in the share capital of the Company as approved by the shareholders of the Company in the General Meeting (the “ Share Consolidation ”). Further details of the Share Consolidation are set out in the Company’s announcements dated 27 April 2017 and 18 July 2017, and the Company’s circular dated 26 July 2017.

On 15 December 2017, the Company’s shareholders approved at the annual general meeting a final dividend of HK$0.10 per share payable in cash with a scrip dividend alternative (the “ 2017 Scrip Dividend Scheme ”) for the year ended 31 July 2017 (the “ 2017 Final Dividend* ”). During the six months ended 31 January 2018, 990,515 new shares were issued by the Company at a deemed price of HK$12.804 per share, credited as fully paid, to shareholders of the Company who had elected to receive scrip shares in lieu of cash under the 2017 Scrip Dividend Scheme to settle HK$12,683,000 of the 2017 Final Dividend. The remaining of the 2017 Final Dividend of HK$47,826,000 was satisfied by cash.

Further details of the 2017 Scrip Dividend Scheme are set out in the Company’s circular dated 3 January 2018.

# During the period ended 31 January 2018, 60,000 ordinary shares were issued in respect of share options exercised under the Company’s share option scheme at an exercise price of HK$4.7 per share and total cash consideration of HK$282,000 was received. The share option reserve of HK$115,000 was released to the share capital.

5

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Condensed Consolidated Statement of Changes in Equity (Continued)

For the six months ended 31 January 2018

	Attributable to owners of the Company Investment Share Capital Exchange Non- Share revaluation option Hedging reduction General Other Statutory fluctuation Retained controlling capital reserve reserve reserve reserve reserve reserve reserve reserve profits Sub-total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 31 July 2016 and 1 August 2016 (Audited) 4,050,252 1,241,566 65,633 9,114 4,692 646,700 233,252 28,996 (399,139) 18,476,669 24,357,735 534,115 24,891,850 Profit for the period — — — — — — — — — 913,135 913,135 19,373 932,508 Other comprehensive income/(expense) for the period: Changes in fair values of available-for-sale financial assets — 52,177 — — — — — — — — 52,177 — 52,177 Exchange realignments — — — — — — — — (50,324) — (50,324) — (50,324) Share of other comprehensive income/(expense) of associates — 3,677 — (6,892) — — — — (132,455) — (135,670) 128 (135,542)
Total comprehensive income/ (expense) for the period — 55,854 — (6,892) — — — — (182,779) 913,135 779,318 19,501 798,819 Final 2016 dividend declared — — — — — — — — — (57,340) (57,340) — (57,340) Share of reserve movements of an associate — — — — — — (17,249) 6,696 — (6,660) (17,213) — (17,213) Capital contribution from non-controlling shareholders of subsidiaries — — — — — — — — — — — 484 484 Shares issued in lieu of cash dividend* 9,651 — — — — — — — — — 9,651 — 9,651 Dividend paid to a non-controlling shareholder of a subsidiary — — — — — — — — — — — (38,220) (38,220) Share options exercised# 3,038 — (898) — — — — — — — 2,140 — 2,140
At 31 January 2017 (Unaudited) 4,062,941 1,297,420 64,735 2,222 4,692 646,700 216,003 35,692 (581,918) 19,325,804 25,074,291 515,880 25,590,171

On 16 December 2016, the Company’s shareholders approved at the annual general meeting a final dividend of HK$0.0019 per share before the effect of the Share Consolidation (or HK$0.095 per share after the effect of the Share Consolidation) payable in cash with a scrip dividend alternative (the “ 2016 Scrip Dividend Scheme ”) for the year ended 31 July 2016 (the “ 2016 Final Dividend* ”). During the six months ended 31 January 2017, 66,196,277 new shares before the effect of the Share Consolidation (or 1,323,925 new shares after the effect of the Share Consolidation) were issued by the Company at a deemed price of HK$0.1458 per share before the effect of the Share Consolidation (or HK$7.290 per share after the effect of the Share Consolidation), credited as fully paid, to shareholders of the Company who had elected to receive scrip shares in lieu of cash under the 2016 Scrip Dividend Scheme to settle HK$9,651,000 of the 2016 Final Dividend. The remaining of the 2016 Final Dividend of HK$47,689,900 was satisfied by cash.

Further details of the 2016 Scrip Dividend Scheme are set out in the Company’s circular dated 4 January 2017.

# During the period ended 31 January 2017, 20,000,000 ordinary shares before the effect of the Share Consolidation (or 400,000 ordinary shares after the effect of the Share Consolidation) were issued in respect of a share option exercised under the Company’s share option scheme at an exercise price of HK$0.107 per share before the effect of the Share Consolidation (or HK$5.350 per share after the effect of the Share Consolidation) and total cash consideration of HK$2,140,000 was received. The share option reserve of HK$898,000 was released to the share capital.

6

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Condensed Consolidated Statement of Cash Flows

For the six months ended 31 January 2018

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES	321,931	(54,146)
	CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of items of property, plant and equipment	(688,202)	(367,109)
	Additions to investment properties	(1,392)	(9,418)
	Deposits paid for additions to investment properties	(5,648)	(6,577)
	Acquisition of unlisted available-for-sale financial assets	(30,311)	(2,270)
	Acquisition of an associate	—	(89,102)
	Advances to associates	—	(4,519)
	Advances to joint ventures	(84,651)	(24,000)
	Repayment from a joint venture	—	637,091
	Dividends received from unlisted available-for-sale financial assets	23,240	36,215
	Increase in pledged bank balances and time deposits	(18,779)	(72,562)
	Others	(7,100)	5,517
	NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES	(812,843)	103,266
	CASH FLOWS FROM FINANCING ACTIVITIES
	New bank borrowings raised	689,000	354,500
	Guaranteed notes issued	3,124,800	—
	Repayment of bank borrowings	(1,156,606)	(91,758)
	Repayment of guaranteed notes	(2,734,550)	—
	Guaranteed note issue expenses	(24,861)	—
	Bank financing charges	(7,294)	(10,562)
	Dividend paid	(47,826)	(47,689)
	Dividend paid to a non-controlling shareholder of a subsidiary	(14,524)	(38,220)
	Capital contribution from non-controlling shareholders of subsidiaries	—	484
	Others	282	2,140
	NET CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES	(171,579)	168,895
	NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS	(662,491)	218,015
	Cash and cash equivalents at beginning of period	2,664,066	2,354,682
	Effect of foreign exchange rate changes, net	23,834	(4,516)
	CASH AND CASH EQUIVALENTS AT END OF PERIOD	2,025,409	2,568,181
	ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
	Non-pledged cash and bank balances	981,815	857,363
	Non-pledged time deposits	1,043,594	1,710,818
		2,025,409	2,568,181

7

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Notes to Condensed Consolidated Interim Financial Statements 31 January 2018

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 31 January 2018 have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) and with Hong Kong Accounting Standard (“ HKAS ”) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants.

The financial information relating to the year ended 31 July 2017 that is included in the condensed consolidated statement of financial position as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to those statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:

The Company has delivered the financial statements for the year ended 31 July 2017 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.

The Company’s auditor has reported on those financial statements. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

The condensed consolidated interim financial statements have not been audited by the Company’s auditor but have been reviewed by the Company’s audit committee.

2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and basis of presentation used in the preparation of these interim financial statements are the same as those used in the Group’s audited consolidated financial statements for the year ended 31 July 2017.

The Group has adopted the new and revised Hong Kong Financial Reporting Standards (“ HKFRSs ”, which also include HKASs and Interpretations) which are applicable to the Group and are effective in the current period. The adoption of these new and revised HKFRSs has had no material impact on the reported results or financial position of the Group.

3. SEGMENT INFORMATION

The following table presents revenue and results for the Group’s reportable segments:

	Six months ended 31 January (Unaudited)
	Property Property development and sales investment Hotel operation Restaurant operation Others Eliminations 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Consolidated 2018 2017 HK$’000 HK$’000
Segment revenue: Sales to external customers Intersegment sales Other revenue	— — 349,482 345,839 231,933 209,081 268,469 248,653 13,896 14,863 — — — — 10,120 7,955 — 90 — — 13,556 12,547 (23,676) (20,592) 2,041 3,637 548 757 564 16 168 180 17,971 4,683 — —	863,780 818,436 — — 21,292 9,273
Total	2,041 3,637 360,150 354,551 232,497 209,187 268,637 248,833 45,423 32,093 (23,676) (20,592)	885,072 827,709
Segment results	(6,711) (18,751) 273,059 283,832 37,814 37,777 (5,705) (7,800) 12,948 (6,927) — —	311,405 288,131 31,633 5,487 20,348 7,016 575,044 502,876 (108,231) (83,638)
Interest income from bank deposits — unallocated Unallocated revenue Fair value gains on investment properties Unallocated expenses Profit from operating activities Finance costs Share of profits and losses of associates Share of profits and losses of associates — unallocated Share of profits and losses of joint ventures Profit before tax Tax Profit for the period	— — 575,044 502,876 — — — — — — — — 28 16 — — (251) — (1,288) (2,147) — 1,749 — — (2,314) (26,026) 623,873 359,843 — — (577) — (8,397) — — —
		830,199 719,872 (138,522) (84,488) (1,511) (382) (10,321) 7,342 612,585 333,817
		1,292,430 976,161 (41,176) (43,653)
		1,251,254 932,508

8

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

3. SEGMENT INFORMATION (CONTINUED)

The following table presents the total assets and liabilities for the Group’s reportable segments:

Property Property development and sales investment Hotel operation Restaurant operation Others 31 January 31 July31 January 31 July31 January 31 July31 January 31 July31 January 31 July 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Consolidated 31 January 31 July 2018 2017 (Unaudited) (Audited) HK$’000 HK$’000
Segment assets 2,607,315 2,233,47717,473,374 16,657,105 4,921,206 4,076,803 578,672 586,663 264,984 242,782 Interests in associates 5,876 5,890 — — 172,957 159,478 (10,992) (9,078) — — Interests in associates — unallocated Interests in joint ventures 1,188,983 1,116,246 6,610,320 5,986,447 — — (577) — 126,713 121,490 Unallocated assets Total assets Segment liabilities 1,482,643 777,431 180,020 194,047 247,390 279,216 40,772 43,158 9,198 9,932 Bank borrowings Guaranteed notes Other unallocated liabilities Total liabilities	25,845,551 23,796,830 167,841 156,290 3,639,499 3,399,586 7,925,439 7,224,183 3,312,849 3,864,102
	40,891,179 38,440,991
	1,960,023 1,303,784 6,576,000 6,905,981 3,105,184 2,731,230 427,777 395,457
	12,068,984 11,336,452

4. PROFIT FROM OPERATING ACTIVITIES

(a) The Group’s profit from operating activities is arrived at after charging/(crediting):

	Six months ended	Six months ended
	31 January
	2018	2017
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
	Depreciation# 42,145	37,005
	Interest income from bank deposits (31,633)	(5,487)
	Other interest income (6,404)	(3,872)
	Dividend income from unlisted available-for-sale financial assets (10,700)	(7,740)
	Foreign exchange (gains)/losses, net (9,105)	9,734*

Depreciation charge of approximately HK$39,648,000 (Six months ended 31 January 2017: HK$34,884,000) for property, plant and equipment is included in “other operating expenses” on the condensed consolidated income statement. * Foreign exchange losses, net was included in “other operating expenses” on the condensed consolidated income statement in prior period.

(b) Other than those mentioned in note 4(a) above, “other operating expenses” also included service fee for operation of a club in the Group’s hotel operation in Vietnam of approximately HK$36,664,000 (Six months ended 31 January 2017: HK$31,994,000).

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 9

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

5. FINANCE COSTS

	FINANCE COSTS	FINANCE COSTS
	Six months ended
	31 January
	2018	2017
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
	Interest on bank borrowings 75,483	57,356
	Interest on guaranteed notes 127,168	79,490
	Bank financing charges 21,599	24,256
	224,250	161,102
	Less: Amount capitalised in a hotel development project (60,306)	(48,441)
	Amount capitalised in properties under development for sale (25,422)	(28,173)
	138,522	84,488

6. TAX

Hong Kong profits tax has been provided at the rate of 16.5% (Six months ended 31 January 2017: 16.5%) on the estimated assessable profits arising in Hong Kong during the period.

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the places in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

	Six months ended	Six months ended
	31 January
	2018	2017
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
	Current tax
	Hong Kong 20,398	21,999
	Overseas 16,101	14,041
	36,499	36,040
	Deferred tax 4,609	7,800
	Prior years’ underprovision/(overprovision)
	Hong Kong 75	(85)
	Overseas (7)	(102)
	68	(187)
	Tax charge for theperiod 41,176	43,653

10 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

7. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Earnings
	Earnings for the purpose of basic earnings per share	1,223,639	913,135
	Effect of dilutive potential ordinary shares arising from adjustment
	to the share of profit of an associate based on dilution of its
	earnings per share	(202)	(47)
	Earnings for thepurpose of diluted earningsper share	1,223,437	913,088
		’000	’000
			(Adjusted)
	Number of shares
	Weighted average number of ordinary shares for the purpose of basic
	earnings per share	605,075	603,327
	Effect of dilutive potential ordinaryshares arising from share options	2,593	1,227
	Weighted average number of ordinary shares for the purpose of diluted
	earningsper share	607,668	604,554

The weighted average number of shares for the purpose of earnings per share were adjusted to reflect the Share Consolidation. Comparative figures have also been adjusted on the assumption that the Share Consolidation had been effective in the prior period.

8. DEBTORS, DEPOSITS PAID AND OTHER RECEIVABLES

The Group maintains various credit policies for different business operations in accordance with business practices and market conditions in which the respective subsidiaries operate. Sales proceeds receivable from the sale of properties are settled in accordance with the terms of the respective contracts. Rent and related charges in respect of the leasing of properties are receivable from tenants, and are normally payable in advance with rental deposits received in accordance with the terms of the tenancy agreements. Hotel and restaurant charges are mainly settled by customers on a cash basis except for those corporate clients who maintain credit accounts with the respective subsidiaries, the settlement of which is in accordance with the respective agreements.

An ageing analysis of the trade debtors, based on payment due date, as at the end of the reporting period is as follows:

		31 January	31 July
		2018	2017
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Trade debtors:
	Not yet due or less than 30 days past due	14,176	11,468
	31 - 60 days past due	3,434	2,269
	61 - 90 days past due	1,555	655
	Over 90 days past due	5,658	4,611
		24,823	19,003
	Other receivables	498,625	436,939
	Deposits paid and prepayments	115,871	74,474
		639,319	530,416

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 11

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

9. CREDITORS, DEPOSITS RECEIVED AND ACCRUALS

An ageing analysis of the trade creditors, based on payment due date, as at the end of the reporting period is as follows:

		31 January	31 July
		2018	2017
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Trade creditors:
	Not yet due or less than 30 days past due	25,433	18,966
	31 - 60 days past due	1,609	865
	61 - 90 days past due	420	120
	Over 90 days past due	433	74
		27,895	20,025
	Other payables and accruals	174,070	267,498
	Deposits received and other provisions	1,243,873	164,482
		1,445,838	452,005

10. GUARANTEED NOTES

US$350,000,000 5.7% Guaranteed Notes due 2018

On 18 January 2013, Lai Sun International Finance (2012) Limited, a wholly-owned subsidiary of the Company, issued guaranteed notes in an aggregate principal amount of US$350,000,000 (the “ 2013 Notes ”). The 2013 Notes were guaranteed by the Company, had a maturity term of five years and bear a fixed interest rate of 5.7% per annum with interest payable semi-annually in arrears. The 2013 Notes were listed on the Stock Exchange and have been fully redeemed in January 2018 upon maturity.

US$400,000,000 4.6% Guaranteed Notes due 2022

On 13 September 2017, LSD Bonds (2017) Limited, a wholly-owned subsidiary of the Company, issued guaranteed notes in an aggregate principal amount of US$400,000,000 (the “ 2017 Notes ”). The 2017 Notes are guaranteed by the Company, have a maturity term of five years and bear a fixed interest rate of 4.6% per annum with interest payable semi-annually in arrears. The 2017 Notes are listed on the Stock Exchange.

The net proceeds from the offering of the 2017 Notes are approximately US$397,000,000. Apart from refinancing the 2013 Notes, the proceeds will be used for general corporate purposes.

11. CAPITAL COMMITMENTS

The Group had the following commitments not provided for in the condensed consolidated interim financial statements at the end of the reporting period:

		31 January	31 July
		2018	2017
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Contracted, but not provided for
	Purchase of items of property, plant and equipment	3,257	6,691
	Development and operation of a hotel project	557,600	1,187,063
	Additions to investment properties	10,213	3,479
		571,070	1,197,233

12 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

12. CONTINGENT LIABILITIES

Saved as disclosed elsewhere in the condensed consolidated interim financial statements, the Group also had the following contingent liabilities at the end of the reporting period:

• (a) Contingent liabilities not provided for in the condensed consolidated interim financial statements:

		31 January	31 July
		2018	2017
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Guarantees given to banks in connection with
	facilitiesgranted to and utilised by joint ventures	787,000	1,092,000

• (b) Pursuant to an indemnity deed (the “ Lai Fung Tax Indemnity Deed ”) dated 12 November 1997 entered into between the Company and Lai Fung Holdings Limited (“ Lai Fung ”), the Company has undertaken to indemnify Lai Fung in respect of certain potential income tax and land appreciation tax (“ LAT ”) of the People’s Republic of China (the “ PRC ”) payable or shared by Lai Fung in consequence of the disposal of any of the property interests attributable to Lai Fung through its subsidiaries and its associates as at 31 October 1997 (the “ Property Interests ”). These tax indemnities given by the Company apply in so far as such tax is applicable to the difference between (i) the value of the Property Interests in the valuation thereon by Chesterton Petty Limited (currently known as “Knight Frank Petty Limited”), independent chartered surveyors, as at 31 October 1997 (the “ Valuation ”); and (ii) the aggregate costs of such Property Interests incurred up to 31 October 1997, together with the amount of unpaid land costs, unpaid land premium and unpaid costs of resettlement, demolition and public utilities and other deductible costs in respect of the Property Interests. The Lai Fung Tax Indemnity Deed assumes that the Property Interests are disposed of at the values attributed to them in the Valuation, computed by reference to the rates and legislation governing PRC income tax and LAT prevailing at the time of the Valuation.

The indemnities given by the Company do not cover (i) new properties acquired by Lai Fung subsequent to the listing of the shares of Lai Fung (the “ Listing ”) on the Stock Exchange; (ii) any increase in the relevant tax which arises due to an increase in tax rates or changes to the legislation prevailing at the time of the Listing; and (iii) any claim to the extent that provision for deferred tax on the revaluation surplus has been made in the calculation of the adjusted net tangible asset value of Lai Fung as set out in Lai Fung’s prospectus dated 18 November 1997.

After taking into account the Property Interests currently held by Lai Fung as at 31 January 2018 which are covered under the Lai Fung Tax Indemnity Deed and the prevailing tax rates and legislation governing PRC income tax and LAT, the total amount of tax indemnity given by the Company is estimated to be approximately HK$0.8 billion (31 July 2017: HK$0.8 billion).

As at 31 January 2018 and 31 July 2017, the Company recorded an aggregate provision for tax indemnity of approximately HK$93,000,000.

13

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

13. RELATED PARTY TRANSACTIONS

In addition to the related party transactions and balances detailed elsewhere in the condensed consolidated interim financial statements, the Group entered into the following material transactions with related parties during the period:

(a) Transactions with related parties

			Six months ended	Six months ended
			31 January
			2018	2017
			(Unaudited)	(Unaudited)
			HK$’000	HK$’000
	Rental income and building management fee received or
	receivable from eSun Holdings Limited (“eSun”) and
	its subsidiaries (collectively the “eSun Group”),
	an associate	(Note)	6,646	6,488
	Sharing of corporate salaries on a cost basis allocated to:
	— LSG		4,795	4,275
	— the eSun Group		28,199	24,787
	Sharing of administrative expenses
	on a cost basis allocated to:
	— LSG		1,052	644
	— the eSun Group		3,622	2,186
	Rental expenses and building
	management fees paid or payable to:
	— a fellow subsidiary	(Note)	—	2,905
	— an associate of LSG	(Note)	1,157	1,082
	— the eSun Group	(Note)	33	32
	Sharing of corporate salaries on
	a cost basis allocated from:
	— LSG		3,063	3,137
	— the eSun Group		3,489	3,402
	Sharing of administrative expenses
	on a cost basis allocated from:
	— LSG		—	11
	— the eSun Group		891	269

Note: These transactions were entered into based on terms stated in the respective agreements or contracts and were charged on bases mutually agreed by the respective parties.

(b) Compensation of key management personnel of the Group

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Short term employee benefits	17,918	16,945
	Post-employment benefits	137	134
	Total compensationpaid to keymanagementpersonnel	18,055	17,079

14

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

14. FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Financial instruments for which fair value is disclosed

Except for the guaranteed notes with a fair value in aggregate of approximately HK$3,112,789,000 (31 July 2017: HK$2,759,600,000), of which the fair value was determined by reference to the closing price of the guaranteed notes published by a leading global financial market data provider as at the end of the reporting period, the directors consider the carrying amounts of all other financial assets and financial liabilities measured at amortised cost approximate to their fair values as at the end of the reporting period.

Financial instruments measured at fair value

		Level 1	Level 2	Level 3	Total
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
		HK$’000	HK$’000	HK$’000	HK$’000
	As at 31 January 2018
	Financial assets
	Available-for-sale financial assets, at fair value	—	243,382	1,516,912	1,760,294
	Financial liabilities
	Derivative financial instruments	—	—	5,728	5,728
		Level 1	Level 2	Level 3	Total
		(Audited)	(Audited)	(Audited)	(Audited)
		HK$’000	HK$’000	HK$’000	HK$’000
	As at 31 July 2017
	Financial assets
	Available-for-sale financial assets, at fair value	—	171,123	1,394,371	1,565,494

The movements in fair value measurements in Level 3 during the period are as follows:

(i) Available-for-sale financial assets

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Available-for-sale financial assets, at fair value
	At beginning of period	1,394,371	1,204,693
	Total gains recognised in other comprehensive income	122,541	47,455
	At end ofperiod	1,516,912	1,252,148

• (ii) Derivative financial instruments

		Six months ended	Six months ended
		31 January
		2018	2017
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Carrying amount at beginning of the period	—	—
	Fair value losses charged to the hedging reserve	5,728	—
	Carryingamount at end of theperiod	5,728	—

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 15

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

14. FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)

Valuation techniques

Fair value measurement using significant unobservable inputs (Level 3)

Each year, the Group’s management appoints external valuers to be responsible for the external valuations of the Group’s financial instruments (the “ Financial Instrument Valuers ”). Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Group’s management has discussions with the Financial Instrument Valuers on the valuation assumptions and valuation results twice a year when the valuation is performed for interim and annual financial reporting.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

• (i) Fair value of the equity interest in the investee company has been estimated using the fair value of investment properties held by an investee company, which is determined by the direct comparison and the income capitalisation methods detailed below.

The properties are valued by the direct comparison method on the assumption that each property can be sold in its existing state subject to existing tenancies or otherwise with the benefit of vacant possession and by referring to comparable sales transactions as available in the relevant markets. Comparison is based on prices realised on actual transactions or asking prices of comparable properties. Comparable properties with similar sizes, characters and locations are analysed, and carefully weighed against all respective advantages and disadvantages of each property in order to arrive at a fair comparison of value.

The properties are also valued by the income capitalisation approach taking into account the rents passing of the properties and the reversionary potential of the tenancies, and reconciling the two approaches, if applicable.

• (ii) Derivative financial instruments, being the cross currency swaps (the “ CCS ”), are measured using valuation techniques similar to forward pricing and swap models, using present value calculations. The models incorporate various market observable inputs including the credit quality of counterparties, foreign exchange spot rates and interest rate curves. The carrying amounts of the derivative financial instruments are the same as their fair values.

16

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Notes to Condensed Consolidated Interim Financial Statements (Continued)

31 January 2018

14. FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)

Valuation techniques (Continued)

Information about fair value measurement using significant unobservable inputs (Level 3)

		Significant	Value of
31 January 2018	Valuation technique	unobservable inputs	unobserved inputs	Notes
Available-for-sale	Income capitalisation	Average monthly market	HK$148	1
financial assets	method	rent per square foot
		Capitalisation rate	3.0%	2
Derivative financial	Discounted	Expected exposure	HK$2.71 million to	3
instruments — CCS	cash flow with	at default — counterparty	HK$46.36 million
	swaption approach
		Expected exposure	HK$3.76 million to	4
		at default — the Group	HK$77.91 million
		Credit spread — counterparty	4.05 basis point to	5
			108.61 basis point
		Credit spread — the Group	18.02 basis point to	6
			117.28 basis point
		Loss given default ratio —	80%	7
		counterparty non-
		performance risk
		Loss given default ratio —	60%	8
		own credit risk
		Significant	Value of
31 July2017	Valuation technique	unobservable inputs	unobserved inputs	Notes
Available-for-sale	Income capitalisation	Average monthly market	HK$141	1
financial assets	method	rent per square foot
		Capitalisation rate	3.0%	2

Notes:

1. The higher the market rent, the higher the fair value

2. The higher the capitalisation rate, the lower the fair value

3. The higher the expected exposure at default — counterparty, the lower the fair value of CCS

4. The higher the expected exposure at default — the Group, the higher the fair value of CCS

5. The higher the credit spread — counterparty, the lower the fair value of CCS

6. The higher the credit spread — the Group, the higher the fair value of CCS

7. The higher the loss given default ratio — counterparty, the lower the fair value of CCS

8. The higher the loss given default ratio — the Group, the higher the fair value of CCS

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 17

Interim Ordinary Dividend

The Board of the Company has resolved not to declare the payment of an interim ordinary dividend for the financial year ending 31 July 2018. No interim ordinary dividend was declared in respect of the last corresponding period.

Management Discussion and Analysis

BUSINESS REVIEW AND OUTLOOK

Major economies around the world continue to navigate in uncertain waters during the period under review. The capital markets has demonstrated robustness despite a delicate economic outlook, punctuated by global events such as elections in Europe, uncertainties surrounding the terms of Brexit, domestic terror events in the US and Europe, and geopolitical situation in the Korean peninsula. Some of these events are likely to linger in the near future and continue to cast a shadow on the outlook.

The property sector in Hong Kong as a whole continued to show resilience and robustness. During the period under review, the slowdown in the luxury end of the retail market has been recovering due to improving visitor numbers while rent has yet to catch up with improved sales. The office leasing market continues to stabilise due to tight supply and continuing demand to consolidate office space in Central as well as general improvement in business sentiment and therefore the need to expand. The residential market was robust, underpinned by a lack of supply with record prices being achieved in recent land tenders, as well as a sustained period of low interest rates. The effect of the recent rate hike since the beginning of last year has yet to be seen, however, interest rates remain low relative to recent history. Labour supply shortages in the construction industry continues to drive wage inflation and pose a challenge on the cost management side.

The management believes it is paramount to prepare the Group for the challenges and opportunities ahead. The Group completed a series of corporate activities as part of the new strategy to improve funding sources, execution capabilities and overall coordination with the wider Lai Sun Group since refocusing the strategy in 2012. Set out below are the projects the Group secured after the implementation of the new rental focused strategy:

		Total Gross Floor		Expected
		Area (“GFA”)		Construction
Date	Secured Projects	(square feet)	Use	Completion Date
Hong Kong	Development Properties
November 2012	Alto Residences	573,268	Commercial/Residential	Q2 2018
April 2014	93 Pau Chung Street	111,354	Commercial/Residential	Q2 2018
May 2014	Hong Kong Ocean Park	365,974	Hotel	Q2 2018
	Marriott Hotel
September 2015	Sai Wan Ho Street Project	59,799	Residential	Q3 2019
May 2016	Novi	42,851	Commercial/Residential	Q3 2019
London, United Kingdom	Investment Properties
April 2014	107 Leadenhall Street	146,606	Commercial/Office	N/A
November 2014	100 Leadenhall Street	177,700	Office	N/A
December 2015	106 Leadenhall Street	19,924	Commercial/Office	N/A

The Group as a whole performed steadily against this challenging environment. The rental portfolio comprises of approximately 1.8 million square feet attributable to the Group, of which about 1.3 million square feet is located in Hong Kong. Despite the softened economic sentiment and weakened retail activity, the Group’s Hong Kong properties performed steadily at nearly full occupancy levels.

18 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

BUSINESS REVIEW AND OUTLOOK (CONTINUED)

The London properties weathered the uncertainties of Brexit well during the period under review. As at the date of this Report, over 70% of the floor area of 106 Leadenhall Street in London has been leased out. This multitenanted property located adjacent to our other two wholly-owned properties, namely 100 and 107 Leadenhall Street, is expected to enhance and enlarge the Group’s strategic property investment portfolio in the City of London. All leases of 100, 106 and 107 Leadenhall Street in London has been aligned to expire in 2023. The Group has appointed DP9, one of the leading professional consultancies in planning, development and regeneration in the United Kingdom to advise on the redevelopment of the site comprising 100, 106 and 107 Leadenhall Street. Skidmore, Owings & Merrill LLP has also been engaged as architect for this project. A planning application was submitted to the City of London Corporation in February 2018 and the proposed new building will rise to 263 meters above ordnance datum, made up of basement storeys, a ground floor and 56 floors above and is expected to provide up to 1.2 million square feet gross external area of high quality, flexible office accommodation to meet forecast demands in the City of London.

The Hong Kong Ocean Park Marriott Hotel (“ Ocean Hotel ”), to be operated by the Marriott group, will provide a total of 471 rooms and approximately 365,974 square feet of attributable rental space to the existing rental portfolio attributable to the Group of approximately 1.8 million square feet. Its construction is expected to be completed in the second quarter of 2018. The hotel project in Phuket, Thailand that the Group invested in June 2017 is at the start of the development stage and the Group will provide material updates on this project as and when available. Set out below is the expected growth of the rental portfolio of the Group:

==> picture [371 x 213] intentionally omitted <==

----- Start of picture text -----

Ocean Hotel
2,192
Hong Kong
• Cheung Sha Wan Plaza
1,826 366 • Causeway Bay Plaza 2
• Lai Sun Commercial Centre
• CCB Tower
• 8 Observatory Road
• AIA Central
• others
1,323
1,323
London, United Kingdom
• 107 Leadenhall Street
• 100 Leadenhall Street
• 106 Leadenhall Street
• 36 Queen Street
405 405
Vietnam
• Caravelle Hotel
98 98
31 Jan 2018 FY 2018
Attributable rental GFA (’000 square feet)
----- End of picture text -----

The Urban Renewal Authority project in Ma Tau Kok, Kowloon, named “93 Pau Chung Street” and the joint venture project in Tseung Kwan O named “Alto Residences” were launched for pre-sale in September 2016 and October 2016, respectively. The 93 Pau Chung Street project offers 209 flats in total, including studios, one and two-bedroom units. Up to 18 March 2018, the Group has pre-sold 207 units in 93 Pau Chung Street with saleable area of approximately 74,500 square feet at an average selling price of approximately HK$16,300 per square foot. The Alto Residences project provides 605 flats, including 23 detached houses. Up to 18 March 2018, the Group has pre-sold 532 units in Alto Residences with saleable area of approximately 298,600 square feet at an average selling price of approximately HK$15,600 per square foot. The Ki Lung Street project in Mong Kok, Kowloon, named “Novi”, offering 138 flats in total was launched for pre-sale in July 2017. Up to 18 March 2018, the Group has pre-sold 135 units in Novi with saleable area of approximately 28,000 square feet at an average selling price of approximately HK$18,700 per square foot. The Sai Wan Ho Street project from the Urban Renewal Authority in Shau Kei Wan, Hong Kong is planned to provide about 144 residential units upon completion with a total GFA of 59,799 square feet.

19

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) Management Discussion and Analysis

BUSINESS REVIEW AND OUTLOOK (CONTINUED)

The Group is encouraged by the sales of 93 Pau Chung Street, Alto Residences and Novi which will be recognised in coming financial years. The Group will continue to participate in government tenders to grow the pipeline.

Set out below is the pipeline of development projects for sale based on construction completion timetable of the Group:

==> picture [382 x 216] intentionally omitted <==

----- Start of picture text -----

398
111
Ocean One
339 Tai Hang Road
Alto Residences
93 Pau Chung Street
287 103 Sai Wan Ho Street project
Novi
34 43
27 60
7
31 Jan 2018 FY 2018 FY 2020
Attributable GFA (’000 square feet)
----- End of picture text -----

The share consolidation on a 1-for-50 basis (“ Share Consolidation ”) and change in board lot size from 15,000 shares to 300 shares announced by the Group on 27 April 2017 is effective from 15 August 2017. It is hoped that this will make investing in the shares of the Group more attractive to a broader range of investors, in particular to institutional investors whose house rules might otherwise prohibit or restrict trading in securities that are priced below a prescribed floor and thus help to further broaden the shareholder base of the Company.

The Group’s strong cash position of HK$2,327.5 million of cash on hand and HK$4,129.5 million of undrawn facilities with a net debt to equity ratio of 26.0% as at 31 January 2018 provides the Group with full confidence and the means to review opportunities more actively. The Group’s gearing excluding the net debt of the London portfolio all of which have a positive carry net of financing costs is 20.2%. The financial liquidity of the Group has been bolstered by the US$400 million guaranteed notes issued in September 2017 which is listed on The Stock Exchange of Hong Kong Limited. The proceeds from this new bond helped to refinance the US$350 million guaranteed notes issued by the Group in 2013 which matured in January 2018. However, the Group will continue its prudent and flexible approach in growing the landbank and managing its financial position.

20 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

OVERVIEW OF INTERIM RESULTS

For the six months ended 31 January 2018, the Group recorded turnover of HK$863.8 million (2017: HK$818.4 million) and a gross profit of HK$496.8 million (2017: HK$484.5 million), representing an increase of approximately 5.5% and 2.5%, respectively over the same period last year.

Set out below is the turnover by segment:

	Six months ended 31 January	Six months ended 31 January
	2018	2017	Difference
	(HK$ million)	(HK$ million)	(HK$ million)	% change
Property investment	349.5	345.8	3.7	1.1%
Property development and sales	—	—	—	N/A
Restaurant operation	268.5	248.7	19.8	8.0%
Hotel operation and others	245.8	223.9	21.9	9.8%
Total	863.8	818.4	45.4	5.5%

For the six months ended 31 January 2018, net profit attributable to owners of the Company was approximately HK$1,223.6 million (2017: HK$913.1 million), representing an increase of approximately 34.0% over the same period last year. The increase is primarily due to a substantial increase in the revaluation of investment properties owned by the Group and held through joint ventures of the Group during the period under review.

Basic earnings per share was HK$2.022 (Adjusted 2017: HK$1.513).

Excluding the effect of property revaluations, net profit attributable to owners of the Company was approximately HK$30.0 million (2017: HK$80.0 million). Net profit per share excluding the effect of property revaluations was HK$0.050 (Adjusted 2017: HK$0.133 per share).

Adjustment has been made to the weighted average number of issued shares of the Company for the six months ended 31 January 2017 for the calculation of basic earnings per share and adjusted net profit per share as above due to the Share Consolidation of the Company being effective on 15 August 2017.

	Six months ended	Six months ended
	31	January
	2018	2017
Profit attributable to owners of the Company	HK$ million	HK$ million
Reported	1,223.6	913.1
Less: Adjustments in respect of revaluation gains of investment properties held by
— the Company and subsidiaries	(575.0)	(502.9)
— associates and joint ventures	(618.6)	(330.2)
Net profit after tax excluding revaluation gains of investment properties	30.0	80.0

Equity attributable to owners of the Company as at 31 January 2018 amounted to HK$28,304.4 million, up from HK$26,599.8 million as at 31 July 2017. Net asset value per share attributable to owners of the Company increased by 6.2% to HK$46.701 per share as at 31 January 2018 from HK$43.965 per share (adjusted) as at 31 July 2017. Adjustment has been made to the total number of issued shares of the Company as at 31 July 2017 due to the Share Consolidation of the Company being effective on 15 August 2017.

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 21

(Continued) Management Discussion and Analysis

PROPERTY PORTFOLIO COMPOSITION

As at 31 January 2018, the Group maintained a property portfolio with attributable GFA of approximately 2.7 million square feet. Approximate attributable GFA (in ’000 square feet) of the Group’s major properties and number of car-parking spaces is as follows:

						Total	No. of
						(excluding	car-parking
						car-parking	spaces
						spaces &	attributable
	Commercial/					ancillary	to the
	Retail	Office	Industrial	Residential	Hotel	facilities)	Group
Completed Properties Held for Rental1	536	1,128	64	—	—	1,728	1,027
Completed Hotel Properties	—	—	—	—	98	98	—
Properties Under Development2	80	—	—	421	366	867	196
Completed Properties Held for Sale	27	—	—	7	—	34	10
Total GFA of major properties of the Group	643	1,128	64	428	464	2,727	1,233

1. Completed and rental generating properties

2. All properties under construction

The above table does not include GFA of properties held by Lai Fung Holdings Limited (“ Lai Fung ”).

PROPERTY INVESTMENT

Rental Income

During the period under review, the Group’s rental operations recorded a turnover of HK$349.5 million (2017: HK$345.8 million), representing a 1.1% increase over the same period last year.

The Group wholly owns three major investment properties in Hong Kong, namely Cheung Sha Wan Plaza, Causeway Bay Plaza 2 and Lai Sun Commercial Centre. The 50:50 joint venture with Henderson Land Development Company Limited (“ Henderson Land ”) at 8 Observatory Road, Kowloon is now fully leased. This is recognised as a component of “Share of profits and losses of joint ventures” in the condensed consolidated income statement.

22 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

PROPERTY INVESTMENT (CONTINUED)

Rental Income (Continued)

Breakdown of rental turnover by major investment properties is as follows:

	Six months ended 31 January	Six months ended 31 January		Period end
	2018	2017	%	occupancy
	HK$ million	HK$ million	Change	(%)
Hong Kong
Cheung Sha Wan Plaza
(including car-parking spaces)	153.7	151.5	1.5	95.0
Causeway Bay Plaza 2
(including car-parking spaces)	89.0	90.2	-1.3	98.2
Lai Sun Commercial Centre
(including car-parking spaces)	25.4	29.3	-13.3	84.1
Others	6.3	6.2	1.6
Subtotal:	274.4	277.2	-1.0
London, United Kingdom
36 Queen Street	12.6	11.5	9.6	100.0
107 Leadenhall Street	27.4	22.8	20.2	100.0
100 Leadenhall Street	32.4	31.6	2.5	100.0
106 Leadenhall Street	2.7	2.7	—	73.6
Subtotal:	75.1	68.6	9.5
Total:	349.5	345.8	1.1
Rental proceeds from joint venture projects
Hong Kong
CCB Tower#(50% basis)	66.1	60.4	9.4	100.0
8 Observatory Road##(50% basis)	28.4	26.3	8.0	100.0
Total:	94.5	86.7	9.0

# CCB Tower is a joint venture project with China Construction Bank Corporation (“ CCB ”) in which each of the Group and CCB has an effective 50% interest. For the six months ended 31 January 2018, the rental proceeds recorded by the joint venture is HK$132.2 million (2017: HK$120.7 million).

## 8 Observatory Road is a joint venture project with Henderson Land in which each of the Group and Henderson Land has an effective 50% interest. For the six months ended 31 January 2018, the rental proceeds recorded by the joint venture is HK$56.8 million (2017: HK$52.6 million).

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 23

(Continued) Management Discussion and Analysis

PROPERTY INVESTMENT (CONTINUED)

Rental Income (Continued)

Breakdown of turnover by usage of our major rental properties is as follows:

	Six months ended 31	Six months ended 31	January 2018	Six months ended 31	Six months ended 31	January 2017
			Attributable			Attributable
	Group	Turnover	GFA	Group	Turnover	GFA
	interest (HK$ million)		(square feet)	interest	(HK$ million)	(square feet)
Hong Kong
Cheung Sha Wan Plaza	100%			100%
Commercial		80.4	233,807		79.1	233,807
Office		63.7	409,896		63.8	409,896
Car-parkingspaces		9.6	N/A		8.6	N/A
Subtotal:		153.7	643,703		151.5	643,703
Causeway Bay Plaza 2	100%			100%
Commercial		60.1	109,770		61.5	109,770
Office		26.4	96,268		26.2	96,268
Car-parkingspaces		2.5	N/A		2.5	N/A
Subtotal:		89.0	206,038		90.2	206,038
Lai Sun Commercial Centre	100%			100%
Commercial		11.9	95,063		15.6	95,063
Office		4.2	74,181		5.0	74,181
Car-parkingspaces		9.3	N/A		8.7	N/A
Subtotal:		25.4	169,244		29.3	169,244
Others		6.3	63,592*		6.2	63,592*
Subtotal:		274.4	1,082,577*		277.2	1,082,577*
London, United Kingdom
36 Queen Street	100%			100%
Office		12.6	60,816		11.5	60,816
107 Leadenhall Street	100%			100%
Commercial		2.5	48,182		2.0	48,149
Office		24.9	98,424		20.8	98,457
Subtotal:		27.4	146,606		22.8	146,606
100 Leadenhall Street	100%			100%
Office		32.4	177,700		31.6	177,700
106 Leadenhall Street	100%			100%
Commercial		0.6	3,540		0.5	3,540
Office		2.1	16,384		2.2	16,384
Subtotal:		2.7	19,924		2.7	19,924
Subtotal:		75.1	405,046		68.6	405,046
Total:		349.5	1,487,623*		345.8	1,487,623*

24 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

PROPERTY INVESTMENT (CONTINUED)

Rental Income (Continued)

Rental Income(Continued)
	Six months ended 31 January 2018				Six months ended 31 January 2017
				Attributable			Attributable
	Group	Turnover		GFA	Group	Turnover	GFA
	interest (HK$ million)			(square feet)	interest (HK$ million)		(square feet)
Joint Venture Projects
Hong Kong
CCB Tower#(50% basis)	50%				50%
Office			65.8	114,603**		60.1	114,555**
Car-parking spaces			0.3	N/A		0.3	N/A
Subtotal:			66.1	114,603**		60.4	114,555**
8 Observatory Road##(50% basis)	50%				50%
Commercial			23.0	45,312***		21.1	45,312***
Office			4.2	37,273***		4.0	37,273***
Car-parking spaces			1.2	N/A		1.2	N/A
Subtotal:			28.4	82,585***		26.3	82,585***
Total:			94.5	197,188		86.7	197,140

* Excluding 10% interest in AIA Central.

** Referring to GFA attributable to the Group. The total GFA of CCB Tower is 229,206 square feet.

*** Referring to GFA attributable to the Group. The total GFA of 8 Observatory Road is 165,170 square feet.

# CCB Tower is a joint venture project with CCB in which each of the Group and CCB has an effective 50% interest. For the six months ended 31 January 2018, the rental proceeds recorded by the joint venture is HK$132.2 million (2017: HK$120.7 million).

## 8 Observatory Road is a joint venture project with Henderson Land in which each of the Group and Henderson Land has an effective 50% interest. For the six months ended 31 January 2018, the rental proceeds recorded by the joint venture is HK$56.8 million (2017: HK$52.6 million).

The average Sterling exchange rate for the period under review appreciated by approximately 4.4% compared with the same period last year. Excluding the effect of currency translation, the Sterling denominated turnover from London properties increased by 4.8% during the period under review. Breakdown of rental turnover of London portfolio for the six months ended 31 January 2018 is as follows:

	2018	2017	%	2018	2017	%
	HK$’000	HK$’000	Change	GBP’000	GBP’000	Change
36 Queen Street	12,612	11,514	9.5	1,206	1,149	5.0
107 Leadenhall Street	27,370	22,818	19.9	2,617	2,277	14.9
100 Leadenhall Street	32,344	31,570	2.5	3,092	3,151	-1.9
106 Leadenhall Street	2,734	2,721	0.5	261	272	-4.0
Total:	75,060	68,623	9.4	7,176	6,849	4.8

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 25

(Continued) Management Discussion and Analysis

PROPERTY INVESTMENT (CONTINUED)

Review of major investment properties

Hong Kong Properties

Cheung Sha Wan Plaza

The asset comprises of a 8-storey and a 7-storey office towers erected on top of a retail podium which was completed in 1989. It is located on top of the Lai Chi Kok MTR station with a total GFA of 643,703 square feet (excluding car-parking spaces). The arcade is positioned to serve the local communities nearby with major banks and recognised restaurants chains as the key tenants.

Causeway Bay Plaza 2

The asset comprises of a 28-storey commercial/office building with car-parking facilities at basement levels which was completed in 1992. It is located at the heart of Causeway Bay with a total GFA of 206,038 square feet (excluding car-parking spaces). Key tenants include a HSBC branch and commercial offices and major restaurants.

Lai Sun Commercial Centre

The asset comprises a 13-storey commercial/carpark complex completed in 1987. It is located near the Lai Chi Kok MTR station with a total GFA of 169,244 square feet (excluding car-parking spaces).

CCB Tower

The Group has a 50:50 interest with CCB in the joint redevelopment project of the former Ritz-Carlton Hotel in Central. This 27-storey office tower is a landmark property in Central featuring underground access to the Central MTR station. The property has a total GFA of 229,206 square feet (excluding car-parking spaces). CCB Tower was completed in 2012 and added 114,603 square feet of attributable GFA to the rental portfolio of the Group. CCB Tower is now fully leased out with 18 floors of the office floors and 2 banking hall floors leased to CCB for its Hong Kong operations.

8 Observatory Road

The Group has a 50:50 interest with Henderson Land in this joint development project at Observatory Road, Kowloon. The property is a 19-storey commercial building with a total GFA of 165,170 square feet (excluding car-parking spaces). The property was completed in June 2015 and is now fully leased out.

AIA Central

The Group has 10% interest in AIA Central which is situated in the central business district of Hong Kong and commands spectacular views over Victoria Harbour, to Kowloon Peninsula to the north, and across Charter Garden and The Peak to the south. This 39-storey office tower provides prime office space with a total GFA of approximately 428,962 square feet (excluding car-parking spaces).

Overseas Properties

36 Queen Street, London EC4, United Kingdom

In February 2011, the Group acquired an office building in the City in central London located at 36 Queen Street. Completed in 1986, it comprises 60,816 square feet gross internal area of office accommodation extending over basement, ground and six upper floors. The building is currently fully leased out.

107 Leadenhall Street, London EC3, United Kingdom

In April 2014, the Group acquired a property located at the core of the insurance district in the City of London, surrounded by 30 St Mary Axe (commonly known as the Gherkin), Lloyd’s of London and the Willis Building at 51 Lime Street. It is a freehold commercial property housing commercial, offices and retail space. The building comprises 146,606 square feet gross internal area of office accommodation extending over basement, ground, mezzanine and seven upper floors. The building is currently fully leased out.

26 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

PROPERTY INVESTMENT (CONTINUED)

Review of major investment properties (Continued)

Overseas Properties (Continued)

100 Leadenhall Street, London EC3, United Kingdom

Following the acquisition of 107 Leadenhall Street in April 2014, the Group announced the acquisition of 100 Leadenhall Street in November 2014 which was completed in January 2015. This property comprises a basement, a lower ground floor, ground floor and nine upper floors and provides 177,700 square feet gross internal area of offices and ancillary accommodation. The property is currently fully let to Chubb Market Company Limited.

106 Leadenhall Street, London EC3, United Kingdom

In December 2015, the Group acquired the property located adjacent to 100 and 107 Leadenhall Street, namely 106 Leadenhall Street, which is a multi-tenanted asset with approximately 19,924 square feet gross internal area of commercial and offices including ancillary space. Up to the date of this Report, over 70% floor area of the property has been leased out.

PROPERTY DEVELOPMENT

No turnover from sales of properties was recognised for the six months ended 31 January 2018 (2017: Nil).

Review of major projects for sale

339 Tai Hang Road, Hong Kong

The Group wholly owns the development project located at 339 Tai Hang Road, Hong Kong. The development project is a luxury residential property with a total GFA of approximately 30,400 square feet (excluding car-parking spaces). The total development cost (including land cost and lease modification premium) is approximately HK$670 million. Up to the date of this Report, 8 out of 9 units of this project have been sold.

Ocean One, 6 Shung Shun Street, Yau Tong

The Group wholly owns this development project, namely “Ocean One” located at No. 6 Shung Shun Street, Yau Tong, Kowloon. This property is a residential-cum-commercial property with a total GFA of about 122,000 square feet (excluding car-parking spaces) or 124 residential units and 2 commercial units. All units have been sold other than 2 shops and 7 car-parking spaces.

Review of major projects under development

Ocean Hotel

The Group was named the most preferred proponent by Ocean Park for the Ocean Hotel project in October 2013 and was officially awarded the project in May 2014. The Ocean Hotel, to be operated by the Marriott group, will provide a total of 471 rooms and add 365,974 square feet of attributable rental space to the existing rental portfolio of the Group of approximately 1.8 million square feet. The total development cost is estimated to be approximately HK$4.4 billion. Construction is expected to be completed in the second quarter of 2018.

Alto Residences

In November 2012, the Group successfully tendered for and secured a site located at Area 68A2, Tseung Kwan O, New Territories, through a 50% joint venture vehicle. The lot has an area of 229,338 square feet with a total GFA of 573,268 square feet split into 458,874 square feet for residential use and 114,394 square feet for commercial use. Construction is expected to be completed in the second quarter of 2018.

This project providing 605 flats, including 23 detached houses was named “Alto Residences” and was launched for pre-sale in October 2016. Up to 18 March 2018, the Group has pre-sold 532 units in Alto Residences with saleable area of approximately 298,600 square feet at an average selling price of approximately HK$15,600 per square foot.

27

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) Management Discussion and Analysis

PROPERTY DEVELOPMENT (CONTINUED)

Review of major projects under development (Continued)

93 Pau Chung Street

In April 2014, the Group was successful in its bid for the development right to the San Shan Road/Pau Chung Street project from the Urban Renewal Authority in Ma Tau Kok, Kowloon, Hong Kong. The lot has an area of 12,599 square feet with a total GFA of 111,354 square feet split into 94,486 square feet for residential use and 16,868 square feet for commercial use. The total development cost is estimated to be approximately HK$1 billion and construction is expected to be completed in the second quarter of 2018.

This project was named “93 Pau Chung Street” and launched for pre-sale in September 2016, offering 209 flats in total, including studios, one and two-bedroom units. Up to 18 March 2018, the Group has pre-sold 207 units in this project with saleable area of approximately 74,500 square feet at an average selling price of HK$16,300 per square foot.

Novi

On 16 May 2016, the Group has completed the purchase of the remaining unit for the proposed development on Ki Lung Street in Mong Kok, Kowloon. The site comprises numbers 48-56 on Ki Lung Street and has a combined site area of 5,054 square feet. It is planned to be developed primarily into a commercial/residential development for sale with a total GFA of 42,851 square feet. The total development cost is expected to be approximately HK$0.4 billion and construction is expected to be completed in the third quarter of 2019.

This project was named “Novi” and launched for pre-sale in July 2017, offering 138 flats in total, including studios, one and two-bedroom units. Up to 18 March 2018, the Group has pre-sold 135 units in this project with saleable area of approximately 28,000 square feet at an average selling price of HK$18,700 per square foot.

Sai Wan Ho Street project

The Group was successful in September 2015 in its bid for the development rights to the Sai Wan Ho Street project from the Urban Renewal Authority in Shau Kei Wan, Hong Kong. The project site covers an area of 7,642 square feet. Upon completion, it is planned to provide about 144 residential units with a total residential GFA of 59,799 square feet. The total development cost is estimated to be approximately HK$0.9 billion and construction is expected to be completed in the third quarter of 2019.

RESTAURANT OPERATIONS

For the six months ended 31 January 2018, restaurant operations contributed HK$268.5 million to the Group’s turnover (2017: HK$248.7 million), representing an increase of approximately 8.0% from the same period last year. The turnover from the restaurants segment was primarily boosted by contributions from the newly opened restaurants, including Chiu Tang in Central, Hong Kong and Old Bazaar Kitchen in Wanchai, Hong Kong.

28 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

RESTAURANT OPERATIONS (CONTINUED)

Up to the date of this Report, restaurant operations include the Group’s interests in 18 restaurants in Hong Kong and mainland China and 2 restaurants in Macau and Las Vegas under management.

			Attributable interest
Cuisine	Restaurant	Location	to the Group	Award
Owned restaurants
Western Cuisine	8½Otto e Mezzo BOMBANA Hong Kong	Hong Kong	37%	Three Michelin stars (2012-2018)
	8½Otto e Mezzo BOMBANA Shanghai	Shanghai	13%	Two Michelin stars (2017)
	Opera BOMBANA	Beijing	20%
	CIAK - In The Kitchen	Hong Kong	62%	One Michelin star (2015-2017)
	CIAK - All Day Italian	Hong Kong	67%	Michelin Bib Gourmand (2017)
	Beefbar	Hong Kong	62%	One Michelin star (2017-2018)
	Operetta	Hong Kong	67%
	Grubers	Hong Kong	34%
Asian Cuisine	China Tang Landmark	Hong Kong	50%
	China Tang Harbour City	Hong Kong	60%
	Howard’s Gourmet	Hong Kong	50%
	Beijing Howard’s Gourmet	Beijing	67%
	Chiu Tang Central	Hong Kong	67%
	Tang2	Hong Kong	67%
	Old Bazaar Kitchen	Hong Kong	63%
Japanese Cuisine	Kaiseki Den by Saotome	Hong Kong	59%	One Michelin star (2010-2018)
	(formally known as “Wagyu Kaiseki Den”)
	Takumi by Daisuke Mori	Hong Kong	63%	One Michelin star (2017-2018)
	(formally known as “Wagyu Takumi”)
	Sushi Masataka	Hong Kong	63%
	(formally known as “Rozan”)
Managed restaurants
Western Cuisine	8½Otto e Mezzo BOMBANA, Macau	Macau	N/A	One Michelin star (2016-2018)
Asian Cuisine	China Tang Las Vegas	Las Vegas	N/A

HOTEL OPERATIONS

Turnover from hotel operations was mainly derived from the Group’s operation of the Caravelle Hotel in Ho Chi Minh City, Vietnam. For the six months ended 31 January 2018, the hotel operation contributed HK$231.9 million to the Group’s turnover (2017: HK$209.1 million).

Caravelle Hotel is a leading international 5-star hotel in the centre of the business, shopping and entertainment district in Vietnam. It is an elegant 24-storey tower with a mixture of French colonial and traditional Vietnamese style and has 335 superbly appointed rooms, suites, exclusive Signature Floors, Signature Lounge and a specially equipped room for the disabled. Total GFA attributable to the Group is 98,376 square feet.

The Group was awarded the hotel tender at Ocean Park in May 2014 and the Ocean Hotel, to be operated by the Marriott group, will provide a total of 471 rooms upon its completion in 2018. The Group is optimistic about the prospects of the Ocean Hotel project given the strong popularity of Ocean Park, which is underpinned by robust growth in visitor numbers to Hong Kong coinciding with its expansion.

29

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) Management Discussion and Analysis

HOTEL OPERATIONS (CONTINUED)

The hotel operation team has extensive experience in providing consultancy and management services to hotels in Mainland China, Hong Kong and other Asian countries. The division’s key strategy going forward will continue to focus on providing management services, particularly to capture opportunities arising from the developments of Lai Fung in Shanghai, Guangzhou, Zhongshan and Hengqin. The hotel division manages Lai Fung’s serviced apartments in Shanghai and Zhongshan under the “STARR” brand. STARR Resort Residence Zhongshan soft opened in August 2013 and comprises two 16-storey blocks with 90 fully furnished serviced apartment units located in the Palm Lifestyle complex in Zhongshan Western district at Cui Sha Road, opposite to the new Zhongshan traditional Chinese medical centre. STARR Hotel Shanghai soft opened in November 2013 and is a 17-storey hotel with 239 fully furnished and equipped hotel units with kitchenette located in the Mayflower Lifestyle complex right in the heart of the Zhabei inner ring road district, within walking distance to Lines 1, 3 and 4 of the Shanghai Metro Station with easy access to major motorways.

INTEREST IN ASSOCIATES (eSun)

As at 31 January 2018, the Group’s interest in eSun Holdings Limited (“ eSun ”) is 36.94%.

During the period under review, share of loss of eSun amounting to HK$5.3 million (2017: share of profit of HK$11.6 million). The decrease is primarily due to (a) a consolidated loss from Media Asia Group Holdings Limited (“ MAGHL ”) owing to unsatisfactory performance of the films released by MAGHL Group during the period under review and (b) lower profit contribution from a joint venture of Lai Fung as sale of the project has been substantially completed, despite a higher fair value gain arising from the revaluation of Lai Fung’s investment properties during the period under review.

INTERESTS IN JOINT VENTURES

During the period ended 31 January 2018, contribution from joint ventures amounted to HK$612.6 million (2017: HK$333.8 million), representing an increase of 83.5%. This is primarily due to strong revaluation gains of CCB Tower and 8 Observatory Road being recognised during the period under review as compared to the same period last year.

	Six months ended	Six months ended
	31 January
	2018	2017
	(HK$ million)	(HK$ million)
Revaluation gains	562.6	303.0
Operating profits	50.0	30.8
Contribution from joint ventures	612.6	333.8

LIQUIDITY AND FINANCIAL RESOURCES

As at 31 January 2018, cash and bank balances and undrawn facilities held by the Group amounted to HK$2,327.5 million and HK$4,129.5 million, respectively.

The Group’s sources of funding comprise mainly internal funds generated from the Group’s business operations, loan facilities provided by banks and guaranteed notes issued to investors.

30 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Management Discussion and Analysis

LIQUIDITY AND FINANCIAL RESOURCES (CONTINUED)

As at 31 January 2018, the Group had bank borrowings of approximately HK$6,576.0 million and guaranteed notes of approximately HK$3,105.2 million. The gearing ratio, expressed as a percentage of the total outstanding net debt (being the total outstanding bank borrowings and guaranteed notes less the pledged and unpledged bank balances and time deposits) to consolidated net assets attributable to owners of the Company, was approximately 26.0%. The Group’s gearing excluding the net debt of the London portfolio all of which had a positive carry net of financing costs was approximately 20.2%. As at 31 January 2018, the maturity profile of the bank borrowings of HK$6,576.0 million was spread over a period of less than 5 years with HK$172.5 million repayable within 1 year, HK$676.7 million repayable in the second year and HK$5,726.8 million repayable in the third to fifth years. All the Group’s borrowings carried interest on a floating rate basis except for the guaranteed notes issued in 2017 which has a fixed rate of 4.6% per annum.

On 13 September 2017, the Group issued guaranteed notes in an aggregate principal amount of US$400 million (“ 2017 Notes ”). The 2017 Notes are guaranteed by the Company, have a maturity term of five years and bear a fixed interest rate of 4.6% per annum with interest payable semi-annually in arrears. The net proceeds from the offering of the 2017 Notes are approximately US$397 million. Apart from refinancing the guaranteed notes of US$350 million issued in 2013, the proceeds will be used for general corporate purposes. The Group entered into cross currency swap agreements with financial institutions for the purpose of hedging the foreign currency risk arising from the 2017 Notes.

As at 31 January 2018, certain investment properties with carrying amounts of approximately HK$16,983.3 million, certain property, plant and equipment with carrying amounts of approximately HK$4,173.2 million, and certain bank balances and time deposits with banks of approximately HK$302.1 million were pledged to banks to secure banking facilities granted to the Group and its joint venture. In addition, certain shares in subsidiaries held by the Group were also pledged to banks to secure banking facilities granted to the Group. Certain shares in joint ventures held by the Group were pledged to banks to secure banking facilities granted to joint ventures of the Group. The Group’s secured bank borrowings were also secured by floating charges over certain assets held by the Group.

The Group’s major assets and liabilities and transactions were denominated in Hong Kong dollars and United States dollars. Considering that Hong Kong dollars are pegged against United States dollars, the Group believes that the corresponding exposure to exchange rate risk arising from United States dollars is nominal. In addition, the Group has investments in United Kingdom with the assets and liabilities denominated in Pounds Sterling. These investments were primarily financed by bank borrowings denominated in Pounds Sterling in order to minimise the net foreign exchange exposure. Other than the abovementioned, the remaining monetary assets and liabilities of the Group were denominated in Renminbi and Vietnamese Dong which were also insignificant as compared with the Group’s total assets and liabilities. The Group manages its foreign currency risk by closely reviewing the movement of the foreign currency rate and considers hedging significant foreign currency exposure should the additional need arise.

CONTINGENT LIABILITIES

Details of contingent liabilities of the Group are set out in note 12 to the condensed consolidated interim financial statements.

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 31

Particulars of Major Properties

COMPLETED PROPERTIES HELD FOR RENTAL

Group Property Name Location Interest Tenure	Approximate Attributable Gross Floor Area (square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Office Industrial facilities) to the Group
Hong Kong Properties Cheung Sha Wan Plaza 833 Cheung Sha Wan Road, 100% The property is held 233,807 409,896 — 643,703 355 Cheung Sha Wan, Kowloon, for a term expiring Hong Kong on 30 June 2047 (New Kowloon Inland Lot No. 5955) Causeway Bay Plaza 2 463-483 Lockhart Road, 100% The property is held 109,770 96,268 — 206,038 57 Causeway Bay, Hong Kong for a term of 99 years (Section J and commencing on the Remaining Portions 15 April 1929 and of Sections D,E,G,H,K,L,M renewable for and O, Subsection 4 of a further term Section H and of 99 years the Remaining Portion of Inland Lot No. 2833) Lai Sun Commercial Centre 680 Cheung Sha Wan Road, 100% The property is held for 95,063 74,181 — 169,244 538 Cheung Sha Wan, a term of which expired on Kowloon, Hong Kong 27 June 1997 and has been (New Kowloon Inland Lot No. 5984) extended upon expiry until 30 June 2047 CCB Tower 3 Connaught Road Central, 50% The property is held — 114,603 — 114,603 19 Hong Kong for a term commencing (Inland Lot No. 8736) from 28 June 1989 and expiring on 30 June 2047 8 Observatory Road 2,4,6,8,10 and 50% The property is held 45,312 37,273 — 82,585 30 12 Observatory Road, for a term of 50 years Tsim Sha Tsui, commencing on Kowloon, Hong Kong 10 January 2014 (Inland Lot No. 11231) Wyler Centre, Phase II 192-200 Tai Lin Pai Road, 100% The property is held for — — 47,932 47,932 3 (20/F and 27/F and Kwai Chung, New Territories, a term of which expired on car-parking spaces Hong Kong 27 June 1997 and has been nos. 17, 18 and 59 on 2/F) extended upon expiry until 30 June 2047 AIA Central 1 Connaught Road Central, 10% The property is held for — 42,896 — 42,896 6 Hong Kong (Marine Lot a term of 999 years No. 275, Section A and commencing from the Remaining Portion 9 September 1895 of Marine Lot No. 278) (for Marine Lot No. 275) and 999 years commencing from 12 October 1896 (for Marine Lot no. 278) Metropolitan Factory 30-32 Chai Wan Kok Street, 100% The property is held — — 11,370 11,370 4 and Warehouse Building Tsuen Wan, New Territories, for a term of which (Units A and B on 10/F and Hong Kong expired on 27 June 1997 car-parking space and has been extended nos. 1, 2, 13 and 14 on G/F) upon expiry until 30 June 2047 Luen Fat Loong 19 Cheung Lee Street, 100% The property is held for a term — — 4,290 4,290 — Factory Building Chai Wan, Hong Kong of 75 years commencing on (4/F) 4 November 1963 and renewable for a further term of 75years
Subtotal of Hong Kong properties held for rental: 483,952 775,117 63,592 1,322,661 1,012

32 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

(Continued) Particulars of Major Properties

COMPLETED PROPERTIES HELD FOR RENTAL (CONTINUED)

Group Property Name Location Interest Tenure	Approximate Attributable Gross Floor Area (square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Office Industrial facilities) to the Group
Overseas Properties 107 Leadenhall Street 107 Leadenhall Street, 100% The property is held freehold 48,182 98,424 — 146,606 — London London EC3, United Kingdom 100 Leadenhall Street 100 Leadenhall Street, 100% The property is held freehold — 177,700 — 177,700 15 London London EC3, United Kingdom 36 Queen Street 36 Queen Street, 100% The property is held freehold — 60,816 — 60,816 — London London, EC4, United Kingdom 106 Leadenhall Street 106 Leadenhall Street, 100% The property is held freehold 3,540 16,384 — 19,924 — London London EC3, United Kingdom
Subtotal of overseasproperties held for rental: 51,722 353,324 — 405,046 15
Total of completedproperties held for rental: 535,674 1,128,441 63,592 1,727,707 1,027

COMPLETED HOTEL PROPERTY

COMPLETED HOTEL PROPERTY	COMPLETED HOTEL PROPERTY
Approximate No. of Attributable car-parking Gross Floor Area spaces Group (square feet) attributable Hotel Name Location Interest Tenure Hotel to the Group
Caravelle Hotel 19 Lam Son Square, 26.01% The property is held District 1, under a land use Ho Chi Minh City, right due to expire Vietnam on 8 October 2040	98,376 —

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 33

(Continued) Particulars of Major Properties

PROPERTIES UNDER DEVELOPMENT

Site Area (approximate Expected Stage of Group square feet) Completion Location Construction Interest (Note) Date	Approximate Attributable Gross Floor Area (square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Hotel Residential facilities) to the Group
Hong Kong Superstructure works 100% 183,460 Q2 2018 Ocean Park in progress Marriott Hotel, Hong Kong Alto Residences, Superstructure works 50% 229,338 Q2 2018 29 Tong Yin Street, in progress Tseung Kwan O, New Territories, Hong Kong 93 Pau Chung Street, Superstructure works 100% 12,599 Q2 2018 20-32 San Shan Road and in progress 93 Pau Chung Street, Ma Tau Kok, Kowloon, Hong Kong 9-11 and 15 Superstructure works 100% 7,642 Q3 2019 Sai Wan Ho Street, in progress Shau Kei Wan, Hong Kong Novi, Superstructure works 100% 5,054 Q3 2019 50 Ki Lung Street, in progress Kowloon, Hong Kong	— 365,974 — 365,974 16 57,197 — 229,437 286,634 150 16,868 — 94,486 111,354 22 — — 59,799 59,799 8 5,196 — 37,655 42,851 —
Total ofproperties under development: 79,261 365,974 421,377 866,612 196

Note: On project basis

COMPLETED PROPERTIES HELD FOR SALE

COMPLETED PROPERTIES HELD FOR	SALE
Group Property Name Location Interest	Approximate Attributable Gross Floor Area (square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Residential facilities) to the Group
Ocean One 6 Shung Shun Street, Yau Tong, 100% Kowloon, Hong Kong 339 Tai Hang Road 339 Tai Hang Road, Hong Kong 100%	27,306 — 27,306 7 — 6,458 6,458 3
Total of completedproperties held for sale: 27,306 6,458 33,764 10

34 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information

CORPORATE GOVERNANCE

The Company has complied with all the code provisions set out in the Corporate Governance Code (“ CG Code ”) contained in Appendix 14 to the Rules Governing the Listing of Securities (“ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) throughout the six months ended 31 January 2018 save for the deviations from code provisions A.4.1, A.5.1 and E.1.2.

Under code provision A.4.1, non-executive directors should be appointed for a specific term and subject to re-election.

None of the existing non-executive directors (“ NEDs ”, including the independent non-executive Directors (“ INEDs ”)) of the Company is appointed for a specific term. However, all directors of the Company (“ Directors ”) are subject to the retirement provisions of the Articles of Association of the Company (“ Articles of Association ”), which require that the Directors for the time being shall retire from office by rotation once every three years since their last election by shareholders of the Company (“ Shareholders ”) and the retiring Directors are eligible for re-election. In addition, any person appointed by the Board as an additional Director (including a NED) will hold office only until the next annual general meeting of the Company (“ AGM ”) and will then be eligible for re-election. Further, in line with the relevant code provision of the CG Code, each of the Directors appointed to fill a casual vacancy would/will be subject to election by the Shareholders at the first general meeting after his/her appointment. In view of these, the Board considers that such requirements are sufficient to meet the underlying objective of the said code provision A.4.1 and, therefore, does not intend to take any remedial steps in this regard.

Under code provision A.5.1, a nomination committee comprising a majority of the independent non-executive directors should be established and chaired by the chairman of the board or an independent non-executive director.

The Company has not established a nomination committee whose functions are assumed by the full Board. Potential new Directors will be recruited based on their knowledge, skills, experience and expertise and the requirements of the Company at the relevant time and candidates for the INEDs must meet the independence criterion. The process of identifying and selecting appropriate candidates for consideration and approval by the Board has been, and will continue to be, carried out by the executive Directors (“ EDs ”). As the above selection and nomination policies and procedures have already been in place and the other duties of the nomination committee as set out in the CG Code have long been performed by the full Board effectively, the Board does not consider it necessary to establish a nomination committee at the current stage.

Under code provision E.1.2, the chairman of the board should attend the annual general meeting.

Due to other pre-arranged business commitments which must be attended to by Dr. Lam Kin Ngok, Peter, the Chairman, Dr. Lam was not present at the AGM held on 15 December 2017. However, Mr. Chew Fook Aun, the Deputy Chairman and an ED present at that AGM took the chair of that AGM pursuant to Article 71 of the Articles of Association to ensure an effective communication with the Shareholders thereat.

35

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Corporate Governance and Other Information (Continued)

CORPORATE GOVERNANCE (CONTINUED)

Board

The Board oversees the overall management of the Company’s business and affairs. The Board’s primary duty is to ensure the viability of the Company and to ascertain that it is managed in the best interests of its Shareholders as a whole while taking into account the interests of other stakeholders.

The Board has delegated the day-to-day management of the Company’s business to the management and the Executive Committee and focuses its attention on matters affecting the Company’s long-term objectives and plans for achieving these objectives, the overall business and commercial strategy of the Company and its subsidiaries (“ Group ”) as well as overall policies and guidelines.

The Board currently comprises nine members, of whom four are EDs, two are NEDs and three are INEDs. The current composition of the Board is characterised by diversity, whether considered in terms of gender, nationality, professional background and skills.

The Board meets at least four times a year with meeting dates scheduled prior to the beginning of the year. Additional board meetings will be held when warranted. Directors also participate in the consideration and approval of matters of the Company by way of written resolutions circulated to Directors together with supporting explanatory materials as and when required.

All Directors have been provided, on a monthly basis, with the Group’s management information updates, giving a balanced and understandable assessment of the Group’s performance, position, recent developments and prospects in sufficient detail to keep them abreast of the Group’s affairs and facilitate them to discharge their duties under the relevant requirements of the Listing Rules.

Chairman and Chief Executive Officer

During the six months ended 31 January 2018 and up to the date of this Report, Dr. Lam Kin Ngok, Peter (an ED) was the Chairman of the Company while Mr. Chew Fook Aun (an ED) and Mr. Lau Shu Yan, Julius (an ED) was the Deputy Chairman and Chief Executive Officer of the Company, respectively. The segregation ensures a clear distinction between the Chairman’s responsibilities to manage the Board and the Chief Executive Officer’s responsibilities to manage the Company’s businesses. The division of responsibilities between the Chairman and the Chief Executive Officer is defined.

SECURITIES TRANSACTIONS BY DIRECTORS AND DESIGNATED

EMPLOYEES

The Company has adopted a Code of Practice for Securities Transactions by Directors and Designated Employees (“ Securities Code ”) on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 to the Listing Rules. The Company has made specific enquiry of all Directors and they have confirmed in writing their compliance with the required standard set out in the Securities Code during the six months ended 31 January 2018.

36 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS

The following Directors and the chief executive of the Company who held office on 31 January 2018 and their respective close associates (as defined in the Listing Rules) were interested or were deemed to be interested in the following interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (“ SFO ”)) on that date (a) as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions, if any, which they were taken or deemed to have under such provisions of the SFO); or (b) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO (“ Register of Directors and Chief Executive ”); or (c) as otherwise notified to the Company and the Stock Exchange pursuant to the Securities Code; or (d) as known by the Directors:

(1) The Company

Long positions in the ordinary shares of the Company (“Shares”) and the underlying Shares

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	Shares
Lam Kin Ngok, Peter	Beneficial	429,232	Nil	322,704,572	417,308	323,551,112	53.38%
	owner/	(Note 1)		(Note 1)	(Note 5)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	400,000	3,773,081	4,173,081	0.69%
	owner/			(Note 3)	(Note 5)
	Owner of
	controlled
	corporations
Lau Shu Yan, Julius	Beneficial	263,500	Nil	Nil	2,086,540	2,350,040	0.39%
	owner	(Note 4)			(Note 5)
Lam Hau Yin, Lester	Beneficial	Nil	Nil	Nil	4,173,081	4,173,081	0.69%
	owner				(Note 5)
U Po Chu_(Note 2)_	Beneficial	26,919	Nil	Nil	Nil	26,919	0.01%
	owner	(Note 2)

37

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

(1) The Company (Continued)

Notes:

• (1) Lai Sun Garment (International) Limited (“ LSG ”) and two of its wholly-owned subsidiaries, namely Zimba International Limited (“ Zimba International ”) and Joy Mind Limited (“ Joy Mind ”), beneficially owned 322,704,572 Shares, representing approximately 53.24% of the issued share capital of the Company. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 322,704,572 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 41.86% in the issued share capital of LSG. LSG is approximately 12.49% owned by Dr. Lam Kin Ngok, Peter and is approximately 29.37% owned by Wisdoman Limited which in turn is 100% beneficially owned by Dr. Lam Kin Ngok, Peter.

On 15 August 2017, the Company implemented the Share Consolidation on the basis that every fifty (50) issued shares in the share capital of the Company were consolidated into one (1) consolidated share in the share capital of the Company (“ Share Consolidation ”). The issued share capital of the Company was decreased from 30,251,304,984 to 605,026,099 as a result of the Share Consolidation.

During the period under review, 60,000 ordinary shares were issued in respect of share options exercised under the Company’s shares option scheme increasing the number of issued shares from 605,026,099 to 605,086,099.

On 30 January 2018, the Company allotted and issued 990,515 new ordinary shares pursuant to its Scrip Dividend Scheme in relation to the final dividend for the year ended 31 July 2017, increasing the total number of issued shares in the Company from 605,086,099 to 606,076,614.

LSG placed up to 50,934,000 Shares of the Company under the secondary block trade agreement dated 16 August 2017 which was completed on 21 August 2017 (“ Placing ”).

The personal interests of Dr. Lam Kin Ngok, Peter were changed from 21,461,617 Shares to 429,232 Shares following the completion of the Share Consolidation.

LSG pledged approximately 208,513,987 Shares (10,425,699,353 issued shares of the Company before the Share Consolidation) held by LSG, Zimba International and Joy Mind as security pursuant to its 7.70% secured guaranteed notes due 2018 under a Share Charge dated 24 July 2014.

LSG and Joy Mind acquired in aggregate 102,000 Shares of the Company on the market in November 2017, thereby increasing their shareholding interests in the Company from 322,602,572 Shares to 322,704,572 Shares.

• (2) Madam U Po Chu is the widow of the late Mr. Lim Por Yen whose estate includes an interest of 3,957,189 Shares (197,859,550 Shares before the Share Consolidation), representing approximately 0.65% of the issued share capital of the Company.

The personal interests of Madam U Po Chu were changed from 1,345,974 Shares to 26,919 Shares following the completion of the Share Consolidation.

• (3) The 20,000,000 Shares owned by The Orchid Growers Association Limited changed to 400,000 Shares following the completion of the Share Consolidation. By virtue of his 100% interest in the issued share capital of The Orchid Growers Association Limited, Mr. Chew Fook Aun was deemed to be interested in these 400,000 Shares.

• (4) The personal interests of Mr. Lau Shu Yan, Julius were changed from 13,175,000 Shares to 263,500 Shares following the completion of the Share Consolidation.

38 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

(1) The Company (Continued)

Notes: (Continued)

• (5) A share option was granted by the Company to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester, the particulars of which are set out below:

		Number of	Number of
		underlying	underlying
		shares	shares
		comprised in	comprised in
		the option	the option		Subscription	Subscription
		before the	after the		price before	price after
		Share	Share		the Share	the Share
Registered Name	Date ofgrant	Consolidation	Consolidation	Option period	Consolidation	Consolidation
Lam Kin Ngok, Peter	18/01/2013	20,865,408	417,308	18/01/2013-17/01/2023	HK$0.322 per Share	HK$16.100 per Share
Chew Fook Aun	05/06/2012	188,654,089	3,773,081	05/06/2012-04/06/2022	HK$0.107 per Share	HK$5.350 per Share
Lau Shu Yan, Julius	18/01/2013	104,327,044	2,086,540	18/01/2013-17/01/2023	HK$0.322 per Share	HK$16.100 per Share
Lam Hau Yin, Lester	18/01/2013	208,654,089	4,173,081	18/01/2013-17/01/2023	HK$0.322 per Share	HK$16.100 per Share

(2) Associated Corporations

• (i) Lai Sun Garment (International) Limited (“LSG”) – the ultimate holding company of the Company

Long positions in the ordinary shares and the underlying shares in LSG

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	48,116,366	Nil	113,127,277	708,575	161,952,218	42.05%
	owner/	(Note 1)		(Note 1)	(Note 6)
	Owner of
	controlled
	corporations
Chew Fook Aun	Owner of	Nil	Nil	202,422	3,819,204	4,021,626	1.04%
	controlled			(Note 2)	(Note 6)
	corporations
Lam Hau Yin, Lester	Beneficial	12,283,938	Nil	Nil	7,571,626	19,855,564	5.16%
	owner	(Note 3)			(Note 6)
Lam Kin Ming	Beneficial	1,007,075	Nil	Nil	Nil	1,007,075	0.26%
	owner	(Note 4)
U Po Chu	Beneficial	825,525	Nil	Nil	Nil	825,525	0.21%
	owner	(Note 5)

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 39

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

• (2) Associated Corporations (Continued)

• (i) Lai Sun Garment (International) Limited (“LSG”) – the ultimate holding company of the Company (Continued)

Notes:

• (1) On 15 August 2017, LSG implemented the share consolidation on the basis that every five (5) issued shares in the share capital of LSG were consolidated into one (1) consolidated share in the share capital of LSG (“ LSG Share Consolidation ”).

On 30 January 2018, LSG allotted and issued 1,917,209 new ordinary shares (“ Scrip Shares ”) pursuant to its Scrip Dividend Scheme in relation to the final dividend for the year ended 31 July 2017, increasing the total number of issued shares in LSG from 383,220,448 to 385,137,657.

The interests of Wisdoman Limited were changed from 562,590,430 shares to 112,518,086 shares following the completion of the LSG Share Consolidation. On 30 January 2018, Wisdoman Limited has elected to receive a total of 609,191 Scrip Shares in lieu of cash dividend pursuant to the Scrip Dividend Scheme of LSG, increasing Wisdoman’s interests in LSG from 112,518,086 shares to 113,127,277 shares. Dr. Lam Kin Ngok, Peter was deemed to be interested in 113,127,277 shares (representing approximately 29.37% of LSG’s issued share capital) by virtue of his 100% interests in the issued share capital of Wisdoman Limited.

The personal interests of Dr. Lam Kin Ngok, Peter were changed from 239,286,305 shares to 47,857,260 shares following the completion of the LSG Share Consolidation. On 30 January 2018, Dr. Lam Kin Ngok, Peter has elected to receive a total of 259,106 Scrip Shares in lieu of cash dividend pursuant to the Scrip Dividend Scheme of LSG, increasing his personal interests in LSG from 47,857,260 shares to 48,116,366 shares.

• (2) The 1,012,111 shares held by The Orchid Growers Association Limited, a company wholly-owned by Mr. Chew Fook Aun changed to 202,422 shares following the completion of the LSG Share Consolidation. Mr. Chew Fook Aun was deemed to be interested in these 202,422 shares.

• (3) The personal interests of Mr. Lam Hau Yin, Lester were changed from 61,088,946 shares to 12,217,789 shares following the completion of the LSG Share Consolidation. On 30 January 2018, Mr. Lam Hau Yin, Lester has elected to receive a total of 66,149 Scrip Shares in lieu of cash dividend pursuant to the Scrip Dividend Scheme of LSG, increasing his personal interests in LSG from 12,217,789 shares to 12,283,938 shares.

• (4) The personal interests of Dr. Lam Kin Ming were changed from 5,008,263 shares to 1,001,652 shares following the completion of the LSG Share Consolidation. On 30 January 2018, Dr. Lam Kin Ming has elected to receive a total of 5,423 Scrip Shares in lieu of cash dividend pursuant to the Scrip Dividend Scheme of LSG, increasing his personal interests in LSG from 1,001,652 shares to 1,007,075 shares.

• (5) The personal interests of Madam U Po Chu were changed from 4,127,625 shares to 825,525 shares following the completion of the LSG Share Consolidation.

40 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

• (2) Associated Corporations (Continued)

• (i) Lai Sun Garment (International) Limited (“LSG”) – the ultimate holding company of the Company (Continued)

Notes: (Continued)

• (6) Share options were granted by LSG to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester, the particulars of which are set out below:

		Number of	Number of
		underlying	underlying
		shares	shares
		comprised in	comprised in
		the option	the option		Subscription	Subscription
		before the	after the		price before	price after
	Date of	LSG Share	LSG Share		the LSG Share	the LSG Share
Registered Name	grant	Consolidation	Consolidation	Option period	Consolidation	Consolidation
Lam Kin Ngok, Peter	18/01/2013	1,876,211	375,242	18/01/2013-17/01/2023	HK$1.21 per share	HK$6.05 per share
	19/06/2017	1,666,666	333,333	19/06/2017-18/06/2027	HK$3.00 per share	HK$15.00 per share
Chew Fook Aun	19/06/2017	19,096,022	3,819,204	19/06/2017-18/06/2027	HK$3.00 per share	HK$15.00 per share
Lam Hau Yin, Lester	18/01/2013	18,762,111	3,752,422	18/01/2013-17/01/2023	HK$1.21 per share	HK$6.05 per share
	19/06/2017	19,096,022	3,819,204	19/06/2017-18/06/2027	HK$3.00 per share	HK$15.00 per share

• (ii) eSun Holdings Limited (“eSun”) - an associate of the Company

Long positions in the ordinary shares and the underlying shares in eSun

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	2,794,443	Nil	551,040,186	1,243,212	555,077,841	37.21%
	owner/			(Note 1)	(Note 2)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	Nil	6,216,060	6,216,060	0.42%
	owner				(Note 2)
Lam Hau Yin, Lester	Beneficial	2,794,443	Nil	Nil	12,432,121	15,226,564	1.02%
	owner				(Note 2)

41

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

• (2) Associated Corporations (Continued)

• (ii) eSun Holdings Limited (“eSun”) - an associate of the Company (Continued)

Notes:

• (1) Transtrend Holdings Limited, a wholly-owned subsidiary of the Company, was interested in 551,040,186 shares in eSun, representing approximately 36.94% of the issued share capital of eSun. As such, Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 551,040,186 shares in eSun by virtue of, in aggregate, his personal and deemed interests of approximately 41.86% and 53.31% in the issued share capital of LSG and the Company, respectively.

• (2) A share option was granted by eSun to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester, the particulars of which are set out below:

		Number of
		underlying
		shares
		comprised in
Registered Name	Date ofgrant	the option	Optionperiod	Subscriptionprice
Lam Kin Ngok, Peter	18/01/2013	1,243,212	18/01/2013-17/01/2023	HK$1.612 per share
Chew Fook Aun	05/06/2012	6,216,060	05/06/2012-04/06/2022	HK$0.92 per share
Lam Hau Yin, Lester	18/01/2013	12,432,121	18/01/2013-17/01/2023	HK$1.612 per share

• (iii) Lai Fung Holdings Limited (“Lai Fung”) – a subsidiary of eSun

Long positions in the ordinary shares and the underlying shares in Lai Fung

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	Nil	Nil	165,485,406	321,918	165,807,324	50.70%
	owner/			(Note 1)	(Note 4)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	600,000	1,009,591	1,609,591	0.49%
	owner/			(Note 2)	(Note 4)
	Owner of
	controlled
	corporations
Lau Shu Yan, Julius	Beneficial	235	Nil	Nil	965,754	965,989	0.30%
	owner	(Note 3)			(Note 4)
Lam Hau Yin, Lester	Beneficial	Nil	Nil	Nil	3,219,182	3,219,182	0.98%
	owner				(Note 4)

42 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

• (2) Associated Corporations (Continued)

• (iii) Lai Fung Holdings Limited (“Lai Fung”) – a subsidiary of eSun (Continued)

Notes:

• (1) On 15 August 2017, Lai Fung implemented the share consolidation on the basis that every fifty (50) issued shares in the share capital of Lai Fung were consolidated into one (1) consolidated share in the share capital of Lai Fung (“ Lai Fung Share Consolidation ”).

On 30 January 2018, Lai Fung allotted and issued 1,122,400 new ordinary shares pursuant to its Scrip Dividend Scheme in relation to the final dividend for the year ended 31 July 2017, increasing the total number of issued shares in Lai Fung from 325,921,734 to 327,044,134.

The 8,274,270,422 shares held by eSun were changed to 165,485,406 shares in Lai Fung following the completion of the Lai Fung Share Consolidation. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 165,485,406 issued shares in Lai Fung by virtue of, in aggregate, his personal and deemed shareholding interests of approximately 37.13% in the issued share capital of eSun.

• (2) The deemed interests of Mr. Chew Fook Aun were changed from 30,000,000 shares to 600,000 shares following the completion of the Lai Fung Share Consolidation. These shares were held by The Orchid Growers Association Limited, a company wholly-owned by Mr. Chew Fook Aun.

• (3) The personal interests of Mr. Lau Shu Yan, Julius were changed from 11,772 shares to 235 shares following the completion of the Lai Fung Share Consolidation.

• (4) A share option was granted by Lai Fung to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester, the particulars of which are set out below:

		Number of	Number of
		underlying	underlying
		shares	shares
		comprised in the	comprised in the		Subscription	Subscription
		option before the	option after the		price before the	price after the
		Lai Fung Share	Lai Fung Share		Lai Fung Share	Lai Fung Share
Registered Name	Date ofgrant	Consolidation	Consolidation	Option period	Consolidation	Consolidation
Lam Kin Ngok, Peter	18/01/2013	16,095,912	321,918	18/01/2013-17/01/2023	HK$0.228 per share	HK$11.400 per share
Chew Fook Aun	12/06/2012	50,479,564	1,009,591	12/06/2012-11/06/2020	HK$0.133 per share	HK$6.650 per share
Lau Shu Yan, Julius	18/01/2013	48,287,738	965,754	18/01/2013-17/01/2023	HK$0.228 per share	HK$11.400 per share
Lam Hau Yin, Lester	18/01/2013	160,959,129	3,219,182	18/01/2013-17/01/2023	HK$0.228 per share	HK$11.400 per share

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 43

Corporate Governance and Other Information (Continued)

DIRECTORS’ INTERESTS (CONTINUED)

• (2) Associated Corporations (Continued)

• (iv) Media Asia Group Holdings Limited (“MAGH”) - a subsidiary of eSun

Long positions in the shares and underlying shares in MAGH

				Total
				number of	Approximate
		Number of	Number of	issued	% of total
		ordinary	underlying	shares and	interests to
		shares	shares	underlying	total issued
Name of Director	Capacity	held	held	shares	shares
Lam Kin Ngok, Peter	Owner of	1,443,156,837	218,340,611	1,661,497,448	77.78%
	controlled	(Note 1)	(Note 2)
	corporations

Notes:

• (1) As at 31 January 2018, these interests in MAGH represented the shares beneficially owned by Perfect Sky Holdings Limited (“ Perfect Sky ”), a wholly-owned subsidiary of eSun, representing approximately 67.56% of the issued share capital of MAGH. eSun is owned as to approximately 36.94% by the Company which in turn is owned as to approximately 53.24% by LSG. As LSG is approximately 12.68% owned by Dr. Lam Kin Ngok, Peter and approximately 29.37% owned by Wisdoman Limited which is turn 100% beneficially owned by Dr. Lam Kin Ngok, Peter, he was deemed to be interested in the said 1,443,156,837 shares in MAGH.

• (2) By virtue of Dr. Lam Kin Ngok, Peter’s interests through the controlled corporations described in Note (1) above, he was also deemed to be interested in the 218,340,611 underlying shares of MAGH comprised in the convertible notes issued to Perfect Sky by MAGH pursuant to a subscription agreement dated 17 April 2015.

Save as disclosed above, as at 31 January 2018, none of the Directors and the chief executive of the Company and their respective close associates was interested or was deemed to be interested in the long and short positions in the shares, underlying shares and/or debentures of the Company or any of its associated corporations, which were required to be notified to the Company and the Stock Exchange, or recorded in the Register of Directors and Chief Executive as aforesaid, notified under the Securities Code or otherwise known by the Directors.

44 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS’ INTERESTS

As at 31 January 2018, so far as was known by or otherwise notified by any Director or the chief executive of the Company, the particulars of the corporations or individuals (are being a Director), who had 5% or more interests in the following long positions in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept under section 336 of the SFO (“ Register of Shareholders ”) or were entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of the Company (“ Voting Entitlements ”) (i.e. within the meaning of Substantial Shareholders of the Listing Rules) were as follows:

Long positions in the Shares and the underlying Shares of the Company

			Number	Approximate
		Nature of	Shares and	% of Shares
Name	Capacity	interests	underlying Shares	in issue
Lai Sun Garment	Beneficial owner	Corporate	322,704,572	53.24%
(International) Limited			(Note 1)
Lam Kin Ngok, Peter	Beneficial owner/	Personal and	323,551,112	53.38%
	Owner of	corporate	(Note 1)
	controlled
	corporations
Yu Cheuk Yi	Beneficial owner	Personal	85,313,623	14.08%
			(Note 2)
Yu Siu Yuk	Beneficial owner	Personal	85,313,623	14.08%
			(Note 2)

Notes:

• (1) As at the date of this Report, LSG and two of its wholly-owned subsidiaries, namely Zimba International Limited and Joy Mind Limited, beneficially owned 322,704,572 Shares, representing approximately 53.24% of the issued share capital of the Company following the completion of the Share Consolidation and the Placing. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 322,704,572 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 41.86% in the issued share capital of LSG.

• (2) As at the date of this Report, Mr. Yu Cheuk Yi and Ms. Yu Siu Yuk jointly held 85,313,623 Shares (14.08 %) according to shareholding shown in last Individual Substantial Notice (Form 1) filed for an event on 16 January 2018 following the completion of the Share Consolidation.

Save as disclosed above, the Directors are not aware of any other corporation or individual (other than a Director or the chief executive of the Company) who, as at 31 January 2018, had the Voting Entitlements or 5% or more interests or short positions in the Shares or underlying Shares of the Company recorded in the Register of Shareholders.

SHARE OPTION SCHEME

At the annual general meeting of the Company held on 11 December 2015, the shareholders of the Company approved the adoption of a new share option scheme (“ New Scheme ”). The share option scheme adopted by the Company on 22 December 2006 (“ Old Scheme ”) terminated when the New Scheme became effective on 23 December 2015 (“ Effective Date ”). No more options will be granted under the Old Scheme but the subsisting options granted prior to its termination will continue to be valid and exercisable in accordance with the terms of the Old Scheme.

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 45

Corporate Governance and Other Information (Continued)

SHARE OPTION SCHEME (CONTINUED)

The purpose of the New Scheme is to provide incentives or rewards to any eligible employee and director of the Company or any of its subsidiaries, any agent or consultant of any member of the Group or any employee of the shareholder of any member of the Group or any holder of any securities issued by any member of the Group for their contribution or would be contribution to the Group and/or to enable the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group. Unless otherwise altered or terminated, the New Scheme will be valid and effective for a period of 10 years commencing on the Effective Date.

During the six-month period ended 31 January 2018, there were 60,000 options exercised by an eligible employee under the New Scheme. Apart from that, no options were granted, exercised, cancelled or lapsed in accordance with the terms of the schemes during the six-month period ended 31 January 2018. Particulars of the outstanding options at the beginning and at the end of the financial period are as follows:

Name and category of participant	Number of underlying shares comprised in share options Adjusted* exercise price of share options Exercise per share Date of Outstanding Granted price after the Exercised Lapsed Outstanding Exercisable grant of at during the of share Share during during at period of options 01/08/2017 period options Consolidation the period the period 31/01/2018 share options* HK$ HK$ per share
Directors Lam Kin Ngok, Peter Chew Fook Aun Lau Shu Yan, Julius Lam Hau Yin, Lester Other employees Other employees Other employees Other employees Other employees	18/01/2013 20,865,408 — 0.322 16.100 — — 417,308 18/01/2013 - 17/01/2023 05/06/2012 188,654,089 — 0.107 5.350 — — 3,773,081 05/06/2012 - 04/06/2022 18/01/2013 104,327,044 — 0.322 16.100 — — 2,086,540 18/01/2013 - 17/01/2023 18/01/2013 208,654,089 — 0.322 16.100 — — 4,173,081 18/01/2013 - 17/01/2023 18/01/2013 173,876,227 — 0.322 16.100 — — 3,477,524 18/01/2013 - 17/01/2023 26/07/2013 4,160,000 — 0.225 11.250 — — 83,200 26/07/2013 - 25/07/2023 21/01/2015 11,440,000 — 0.167 8.350 — — 228,800 21/01/2015 - 20/01/2025 22/01/2016 6,000,000 — 0.094 4.700 60,000 — 60,000 22/01/2016 - 21/01/2026 20/01/2017 3,000,000 — 0.163 8.150 — — 60,000 20/01/2017 - 19/01/2027
Total:	720,976,857 — — — 60,000 — 14,359,534

* Note:

On 15 August 2017, the exercise price of and the number of shares entitled to be subscribed for under the outstanding share options granted under the share option schemes have been adjusted following the completion of the Share Consolidation.

46 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued) PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the six months ended 31 January 2018, the Company did not redeem any of its shares listed and traded on the Stock Exchange nor did the Company or any of its subsidiaries purchase or sell any of such shares.

UPDATE OF DIRECTORS’ INFORMATION

Pursuant to Rule 13.51B(1) of the Listing Rules, changes in Directors’ and Chief Executive Officer’s information since the disclosure made in the Company’s annual report 2016-2017 are set out as follows:

• (1) The Group usually makes annual adjustment to basic salaries and pays discretionary bonuses in January. The basic salaries of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester were adjusted upward with effect from 1 January 2018 (within the range from 3% to 4%). Directors’ remuneration for the six months ended 31 January 2018 and 2017 are as follows:

		Salaries,
		allowances,	Pension
		and benefits	scheme	Total
	Fees	in kind	contributions	remuneration
	HK$’000	HK$’000	HK$’000	HK$’000
For the six months ended 31 January 2018
EDs:
Lam Kin Ngok, Peter_(Chairman)_	—	8,705	9	8,714
Chew Fook Aun_(Deputy Chairman)_	—	4,986	9	4,995
Lau Shu Yan, Julius_(Chief Executive Officer)_	—	2,562	110	2,672
Lam Hau Yin, Lester	—	965	9	974
	—	17,218	137	17,355
NEDs:
Lam Kin Ming	125	—	—	125
U Po Chu	125	—	—	125
	250	—	—	250
INEDs:
Ip Shu Kwan, Stephen	150	—	—	150
Lam Bing Kwan	150	—	—	150
Leung Shu Yin, William	150	—	—	150
	450	—	—	450
	700	17,218	137	18,055

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 47

Corporate Governance and Other Information (Continued)

UPDATE OF DIRECTORS’ INFORMATION (CONTINUED)

• (1) (Continued)

		Salaries,
		allowances,	Pension
		and benefits	scheme	Total
	Fees	in kind	contributions	remuneration
	HK$’000	HK$’000	HK$’000	HK$’000
For the six months ended 31 January 2017
EDs:
Lam Kin Ngok, Peter_(Chairman)_	—	7,850	9	7,859
Chew Fook Aun_(Deputy Chairman)_	—	4,794	9	4,803
Lau Shu Yan, Julius_(Chief Executive Officer)_	—	2,664	107	2,771
Lam Hau Yin, Lester	—	937	9	946
	—	16,245	134	16,379
NEDs:
Lam Kin Ming	125	—	—	125
U Po Chu	125	—	—	125
	250	—	—	250
INEDs:
Ip Shu Kwan, Stephen	150	—	—	150
Lam Bing Kwan	150	—	—	150
Leung Shu Yin, William	150	—	—	150
	450	—	—	450
	700	16,245	134	17,079

• (2) Dr. Lam Kin Ngok, Peter

• (a) was re-appointed the member of Aviation Development and Three-runway System Advisory Committee for a term of two years with effect from 1 August 2017;

• (b) was appointed a non-official member of the Trade and Industry Advisory Board from 1 September 2017 to 31 December 2019;

• (c) was appointed a Standing Committee member of the 13[th] National Committee of the Chinese People’s Political Consultative Conference on 24 January 2018;

• (d) was re-appointed a non-official member of Lantau Development Advisory Committee for a term of two years with effect from 1 February 2018; and

• (e) was appointed the chairman of The Hong Kong Trade Development Council Entertainment Industry Advisory Committee for a term of two years from 1 April 2018 to 31 March 2020.

48 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018

Corporate Governance and Other Information (Continued)

EMPLOYEES AND REMUNERATION POLICIES

As at 31 January 2018, the Group employed a total of approximately 1,600 employees. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to employees based on their merit and in accordance with industry practice. Other benefits including share option scheme, mandatory provident fund scheme, free hospitalisation insurance plan, subsidised medical care and sponsorship for external education and training programmes are offered to eligible employees.

INVESTOR RELATIONS

To ensure our investors have a better understanding of the Company, our management engages in a pro-active investor relations programme. Our Executive Directors and Investor Relations Department communicate with research analysts and institutional investors on an on-going basis and meet with research analysts and the press after our results announcements, attend major investors’ conferences and participate in international non-deal roadshows to communicate the Company’s financial performance and global business strategy.

During six months ended 31 January 2018, the Company has met with a number of research analysts and investors and attended roadshows as follows:

Month	Event	Organiser	Location
October 2017	Post results non-deal roadshow	CLSA	Hong Kong
October 2017	Post results non-deal roadshow	DBS	Singapore
November 2017	Post results non-deal roadshow	BNP	London
November 2017	Post results non-deal roadshow	BNP	New York/Los Angeles
January 2018	The Pulse of Asia Conference	DBS	Singapore

During the period under review, the Company also had research reports published as follows:

Firm	Analyst	Publication Date
DBS	Jeff YAU, Ian CHUI	20 October 2017
HSBC	Roanna CHAU, Keith CHAN	October 2017

The Company is keen on promoting investor relations and enhancing communication with the Shareholders and potential investors. It welcomes suggestions from investors, stakeholders and the public who may contact the Investor Relations Department by phone on (852) 2853 6116 during normal business hours, by fax at (852) 2853 6651 or by e-mail at ir@laisun.com.

Interim Report 2017-2018 • LAI SUN DEVELOPMENT COMPANY LIMITED 49

Corporate Governance and Other Information (Continued)

REVIEW OF INTERIM REPORT

The audit committee of the Company (“ Audit Committee ”) currently comprises two INEDs, Mr. Leung Shu Yin, William and Mr. Lam Bing Kwan and a NED, Dr. Lam Kin Ming. The Audit Committee has reviewed the unaudited interim report (including the unaudited condensed consolidated financial statements) of the Company for the six months ended 31 January 2018.

By Order of the Board Lam Kin Ngok, Peter Chairman

Hong Kong, 22 March 2018

50

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2017-2018